Abstract: There are abundant hydrocarbon resources on the southern margin of Junggar Basin; nevertheless, most of the oil and gas fields were found only in the shallow layer, and the oil and gas reservoirs are very limited. The exploration of the middle-low layers has not made breakthrough. In order to expand the area of exploration, researchers have made lots of studies which are mainly focused on the structural styles. For the purpose of solving this problem, the authors emphatically investigated the reservoir characteristics and the controlling factors of deep reservoirs. Detailed information was acquired by the authors by using such means as casting thin sections, scanning electron microscope (SEM), permeability and porosity test, and fluid inclusion test, combined with carbon and oxygen isotope analysis and vitrinite reflectance (Ro). Studies show that the favorable areas of deep reservoirs are controlled by the sedimentary facies, the distal bars are the best reservoirs in Qingshuihe Formation, and the effective reservoirs of Qigu Formation are located in the upper part of distributary channel sand bodies. The lower paleogeothermal gradient, the less influence of regional tectonic stress and the quick burial in late period of burial process have greatly improved the deep reservoirs on the south margin of Junggar Basin.