Oil shales are developed in the Shale Member of the Middle Jurassic Shimengou Formation in the Qaidam Basin, China. The oil shales can be classified into three quality groups (low-, medium-, and high-quality oil shales) through a comprehensive analysis protocol that includes Rock-Eval pyrolysis, total organic carbon (TOC) content, proximate analysis, gas chromatography-mass spectrometry (GC-MS), X-ray diffraction (XRD), major and trace element analyses, and maceral analysis. The low-quality oil shales mainly contain type II1 kerogen, the medium-quality oil shales mainly contain type I-II1 kerogen, and the high-quality oil shales mainly contain type I kerogen. All are immature to early thermally mature. The oil yield of the oil shales is directly related to their quality and are positively correlated with TOC content and calorific value. All studied samples were deposited under anaerobic conditions but in different paleoenvironments. The low-quality oil shales were mainly deposited in fresh-water environments, whereas the high-quality oil shales were usually developed in highly saline and reducing environments. Salinity stratification and evidence of algal blooms that are conducive to organic matter enrichment were identified in both medium- and high-quality oil shales, the latter having the highest paleoproductivity and the best preservation conditions. In summary, shale quality is controlled by a combination of factors, including algal abundance, preservation conditions, the existence of algal blooms and salinity stratification, and paleoproductivity. This study reveals how these different factors affect the quality of oil shales, which might provide an in-depth explanation for the formation process of lacustrine oil shales.