Abstract:Lithologic-stratigraphic oil and gas reservoirs generously developed in Dainan formation of Eocene (E2d) in Gaoyou sag which located in Subei basin. Sedimentary environment and distribution of facies in Dainan formation were researched based on studying of cores, paleontology, trace elements and well-logging data. The weather condition during the depositional period was hot-and-wet subtropic-warm temperate type. Strong tectonic activities which developed during the depositional period of lower Dainan formation generated a sedimentary environment of nearshore subaqueous alluvial fan and fan delta in salty or semi-salty water, southern step-fault zone of Gaoyou sag developed subaqueous alluvial fan deposits while northern part developed delta and lacustrine deposits. Tectonic activities declined during the depositional period of upper Dainan formation, the water in lacustrine was fresh or brackish, fan delta in the south step-fault zone developed while delta and lacustrine deposits developed in the north. The sandbodies developed under that background could form main reservoirs for oil and gas.