Abstract: The shale oil in Mahu sag, Junggar Basin is the alkaline (salty) lake type shale oil found in China, which is of great significance for unconventional oil and gas exploration and reservoir research. Based on the data of core, thin section, scanning electron microscopy (SEM), geochemistry and imaging logging, the paper qualitatively and quantitatively evaluates the lithofacies and reservoir property, occurrence state of organic matter, and development value of Permian Fengcheng Formation. The lithofacies identification criteria of fine-grained sedimentary rocks in Fengcheng Formation have been established according to mineral composition and fracture development characteristics. It can be divided into three types of lithofacies, i.e., fractured felsic fine-grained lithofacies (Type Ⅰ), laminated mixed fine-grained lithofacies (Type Ⅱ) and laminated cloud (ash) lithofacies (Type Ⅲ). Type I dominated by terrigenous input plays a dominant role. It has good physical reservoir property, dual media of soluble pores and micro-fractures, well-developed macropores and macropores of more than 50%, pore structure with moderate-good distortion, and high oil saturation index, boasting of high commercial development value. Type Ⅲ is a superior lithofacies with commercial development value, while Type Ⅱ is a general lithofacies with mining value. The MY1 well test has achieved a stable and high-yield industrial oil flow, 75% of which is contributed by the fractured felsic fine-grained lithofacies.