Abstract: REE geochemistry and geological implications are examined for the black mudstones and shales from the Lucaogou Formation on the southeastern margin of the Junggar Basin, Xinjiang. The ΣREE range from 51.39×10^-6 to 138.27×10^-6 with an average of 94.23×10^-6, lower than those of the global average upper crust compositions (UCC)and North American Shale Composites (NASC). The geochemical parameters such as ΣLREE/ΣHREE ratios, (La/Yb)_N and (Ce/Yb)_N, and REE distribution patterns reflect a marked differentiation of light and heavy rare earth elements, light rare earth element enrichment, heavy rare earth element depletion and slightly declined REE distribution patterns. The black mudstones and shales display noticeably negative δEu anomalies and slightly negative δCe anomalies. The Ce anomalous values of more than-0.1 suggest a highly stable reduction environment of the study area during the Middle Permian. The highly differentiation of REE exihibits a general low and slowing trend of depositional rates, and progressively deepening of waters during the deposition of the Lucaogou Formation, which is represented by the littoral-shallow lake, bathyal and abyssal lake facies. Judged from the δEu anomalies and the relationship between (La/Yb)_N and ΣREE, the parent rocks of the black mudstones and shales in the Lucaogou Formation are interpreted as the mixture of sedimentary rocks and granites, and may be derived from the Ilianhaerbga Mountain in the south.