Abstract: Shale oil refers to the low mature-semimature oil and gas that is generated and retained in source rocks and occurs in micro-nano level reservoir space of strata in free or adsorbed state, with little or extremely short migrated distance. The paper summarizes the characteristics of low porosity and low permeability of argillutite, and discusses the formation mechanism, evolution, preservation conditions and distribution features of shale oil. The abundance, type and maturity of organic matter are the main factors affecting the oil-generating capacity. TypeⅠor Ⅱ kerogen with good oil-generating capacity is favorable organic matter, while type Ⅲ kerogen is gas-generating dominated. At the proper burial depth that reaches the oil generation threshold, thermochemical reaction will take place to produce large amounts of liquid hydrocarbon. Both the weak hydrodynamic condition and relatively long-term stable tectonic activities lead to the slow subsidence and evolution of organic matter and sediments. Fine argillutite on land contributes to the formation of shale oil and gas due to its wide distribution, various types, large time span, small area of lacustrine basin, abundant provenance and lake level changes.