Abstract: Spectral decomposition technology has been successfully used in the conventional oil and gas and marine facies shale gas ex-ploration and development, but it has not been yet used in continental shale gas exploration practice. The seismic spectrum curves in different fluid reservoirs have different characteristics in such aspects as shapes, slopes, values of dominant frequency and central frequency. According to these features, continental seismic spectrum properties of mud shale in the Middle Jurassic Dameigou Formation of Yuqia sag within northern Qaidam Basin were identified, and gas potential was predicted. The results suggest that the energy coefficient is low in the upper part of Middle Jurassic Dameigou Formation with an average of 0.6719, while it is high in the lower part with an average of 0.7521. The gas content in the field and the total hydrocarbon characteristics show that the gas content in the lower part is better than that in the upper part, with the energy coefficient of 0.7 as the boundary. On such a basis, two favorable tar-get areas were delineated and one of them was drilled as Chaiye 1 well. Therefore, spectral decomposition technology can be used in continental shale gas exploration and development.