Abstract: Yuqia depression in northern Qaidam Basin, as a potential continental shale gas exploration target of Northwest China, is a sedimentary center of Jurassic lacustrine strata with thick dark mudstone and shale layers. Based on such means as the analysis of total organic carbon(TOC), hydrogen index(HI), vitrinite reflectance(R_o), porosity and permeability of shale, scanning electron microscope analysis(SEM), mineral composition and isothermal adsorption features of cores from the well Chaiye-1, the authors investigated natural gas reservoir forming conditions of Yuqia depression. The assessment results show that the organic types and maturity are favorable for the development of organic-matter pores and microfractures. The gas content of Dameigou Formation shale is high because of high TOC content. Clay mineral content has hindered the development of the cracks of the shale but accelerated its adsorption capacity. The shale of the Middle Jurassic Dameigou Formation is thus a significant target of the shale gas exploration in northern Qaidam Basin.