Abstract: The Xihu Sag has been proved as a hydrocarbon-rich basin in the East China Sea with the Pinghu Formation of Eocene as the main source rock. Based on the analysis data of 433 samples from 30 wells in the sag for geochemistry and micronutrients, the characteristics and vertical distribution patterns of organic carbon, micronutrients and rare earth elements are studied for the lower, middle and upper members of the Pinghu Formation respectively. The vertical patterns of palaeosalinities, palaeoclimate, palaeooxidation-reduction environment, palaeowater depth, palaeotemperature and palaeoproductivities of the Pinghu Formation suggest that Rb, Ba and Zr are enriched in micronutrients, shown as significant positive anomalies, while Co, Mo, Sc and Hf are deficient relatively. Sr/Ba、Sr/Cu、paleoclimate value C、V/Cr、Ni/Co、U/Th、V/(V+Ni)、V/Sc、Mn/Fe、Co、Sr、Sr/Cu、Baxs indicate that Pinghu Formation is formed in a terrestrial fresh water environment under warm, semi-arid to semi-humid climate with high paleoproductivity and high potential for hydrocarbon generation.