Abstract: It has been acknowledged for a long time that in the northern margin of Qaidam Basin, the Lower Jurassic mudstone source rock has a better hydrocarbon generation potential than the Middle Jurassic sequences. In this paper, the hydrocarbon generation potential of a set of lacustrine mudstone source rock sequences developed in the Middle Jurassic Member 7 was discussed comprehensively. Based on geochemical analyses on these source rocks collected from the Yuqia area, and in combination with analytical results reported in previous literature, it is indicated that the J2d7 mudstone belongs to organic-rich source rocks. Organic petrographical micro-observation shows that algae, cutinites and sporophytes mainly constitute organic maceral of these mudstone source rocks, with the type of organic matter reaching II1 as best. Additionally, according to information of maturation, it is suggested that this set of source sequences has undergone different histories in different depressions. This implies that it could generate not only oil, but also gas. Although the distribution and quality of the J2d7 mudstone source rocks are heterogeneous in different depressions, this set of source rocks has good hydrocarbon generation capabilities no worse than the Lower Jurassic ones and enough attention should be paid in the future petroleum geologic exploration and research.