The Lucaogou Formation in the Jimsar Sag is the main target layer of shale oil exploration and development in continental basins. However, its paleo-environmental information and organic matter enrichment mechanism still need to be determined. In order to investigate the paleo-environment of the Permian Lucaogou Formation, based on core and thin section observation, we carried out major and trace element analyses on 26 source rocks from Well J10025 by using X-ray fluorescence spectroscopy(XRF) and inductively coupled plasma mass spectrometry(ICP-MS). This analysis, combined with GC-MS biomarker data and typical sedimentary structures, reflects the paleo-environmental characteristics of the Luchaogou Formation. Geochemical indicators such as C-value, Sr/Ba, V/Cr, Pr/Ph, P, and Co show that the Lucaogou Formation was generally developed in a saline lake environment under an arid to semi-arid climate, with relatively deep water during deposition and hypoxic to anoxic conditions. The upper member was deposited in a semi-arid, brackish lake with weak reducibility, deep water body, and high productivity. In contrast, the lower member was deposited in an extremely dry, highly saline, and strongly reductive shallow lake with low productivity. The paleo-environment of the upper member fluctuated wildly, while that of the lower member was relatively stable. The correlation analyses between paleo-environmental indicators and TOC show that the preservation conditions and dilution rate of organic matter have limited influence on organic matter enrichment of the Lucaogou Formation. At the same time, the primary productivity is the main controlling factor.