Abstract: The paper has pointed out that generation of petroleum of continental origin is the natural result of geological development and biological evolution.Striking contrast is mentioned about the structural types and structural background for the creation of lake basins between the eastern and western parts of China.Lakes are divided into two main types: inland and near-sea lakes.Intensive negative movement coupled with specific climatic conditions have resulted in three main types of stratigraphic sequence in which oil of continental origin may be generated,each with its own character of evolution and time and specific geologcal ages for oil occurrence.As studies reveal,during the Meso-Cenozoic,lakes were most well developed in China than elsewhere and lake deposits were widespead throughout the period.Due to different climatic conditions and rapidity of deposition in depressions,the types of lakes so formed were varied.The great thickness of souce rocks and well preservation of organic matter afforded excellent conditions for oil formation.This is one of the reasons why oil of continental origin occupies such an important place in China. In the geochemical aspect,the paper points out that abundant organic matter may also be accumulated in fresh and slightly mineralized water as an excellent medium for oil occurrence.Cases of both ancient and recent have been cited for illustration,and some geochemical indices have been presented for continental source beds.The paper says that for the continental oil and gas basins,organic matter may be divided into three main types:sapropel,transitional and humus,among which the transitionel type is predominant.Organic matter matures toward transformation into hydrocarbons with increasing depth of burial,temperature and pressure.This is common to all continental source beds.Through analysis of such biological index compounds like sterane and triterpane,the genetic relationship between petroleum and its source rocks is established.