Abstract: Lithology, trace elements and rare earth elements were studied for the 5 fresh samples of carbonaceous mudstone taken from the 2nd Member of the Kongdian Formation in the southern Huanghua Depression. X fluorescence and ICP-MS are used for determination of element geochemistry and barium strontium method (Sr/Ba), boron gallium method (B/Ga), boron element method (B) and C, O isotope method used for restoration of paleo-salinity. Upon the basis, the paleo-climatic environment and the openness of the basin are discussed. The results show that during the period while the 2nd Member of the Kongdian Formation was deposited, the climate was humid, and rich in rainfall. It was a closed inland lake basin filled with fresh or subsaline water. The La-Th-Sc, Th-Sc-Zr/10 diagrams and the characteristics of rare earth elements show that the study area was tectonically a marginal depression along an active continental margin. The mudstone is low in rare earth elements (∑REE=135.14~190.6), and high in light rare earth elements (LREE/HREE=9.44~10.96), with negative abnormal Eu (δEu=0.54~0.71), suggesting a granite dominated source area with some sedimentary rocks.