The geochemistry and reservoir characteristics of the lacustrine shale in the Eocene Dongying depression are described in detail based on thin-section and field-emission–scanning electron microscope observations of well cores combined with x-ray diffraction, physical property testing, and geochemical indicators. The Eocene Shahejie (Es) Formation Es4s–Es3x shale member is predominantly carbonate, clay minerals, and quartz. Six lithofacies were identified: (1) laminated limestone (organic-rich laminated limestone and organic-poor laminated limestone), (2) laminated marl, (3) laminated calcareous mudstone, (4) laminated dolomite mudstone, (5) laminated gypsum mudstone, and (6) massive mudstone. The Es4s–Es3x shale samples from three cored wells had total organic carbon (TOC) contents in the range of 0.58 to 11.4 wt. %, with an average of 3.17 wt. %. The hydrocarbon generation potential (free hydrocarbons [S1] + the hydrocarbons cracked from kerogen [S2]) values range from 2.53 to 87.68 mg/g, with an average of 24.19 mg/g. The Es4s–Es3x shale of the Dongying depression has a high organic-matter content with very good or excellent hydrocarbon generation potential. The organic maceral composition is predominantly sapropelinite (up to 95%). The hydrogen index (being S2/TOC) versus the maximum yield temperature of pyrolysate (Tmax) indicates that the organic matter is predominantly type I kerogen, which contains a high proportion of convertible organic carbon. The Es4s–Es3x shale is thermally mature and within the oil window, with the vitrinite reflectance values ranging from 0.46% to 0.74% and the Tmax value ranging from 413°C to 450°C, with the average being 442°C. The shale contains interparticle pores, organic-matter pores, dissolution pores, intracrystalline pores, interlaminar fractures, tectonic fractures, and abnormal-pressure fractures. The primary matrix pore storage is secondary recrystallized intercrystal pores and dissolution pores that formed during thermal maturation of organic matter. The TOC content and effective thickness of the organic-rich shales are the primary factors for hydrocarbon generation. The reservoir capacity is related to the scale, abundance, and connectivity of pore spaces, which are controlled by the characteristics of the lithofacies, mineral composition, TOC content, and microfractures.