A comprehensive study on rift stratigraphy requires a solid understanding of sequence architecture along the steep margins of rift basins. This study analyzes an Eocene lacustrine sequence along the steep margin of the Dongying depression in eastern China through integrated core, well-log, and three-dimensional seismic analyses. The lacustrine sequence is bounded by unconformities and their correlative conformities at the base and top and consists of three systems tracts, namely an early expansion systems tract (EEST), late expansion–early contraction systems tract (LEECST), and late contraction systems tract (LCST), which record a lake expansion–contraction cycle. These systems tracts differ in thickness and development of depositional systems. The EEST is the thickest and contains well-developed marginal and basinal fan systems with an overall retrogradational stacking pattern. The well-developed fan systems are the most striking features within the sequence. The LEECST is the most widespread and contains dominantly profundal–sublittoral deposits. The LCST is the thinnest, with poorly developed fan systems, and is characterized by significant erosion by fluvial incision. The variable thickness and development of depositional systems in the three systems tracts are the responses to the interplay of sediment supply and accommodation space. Accommodation space establishes the framework for sedimentary infill, and sediment supply determines spatial distribution and temporal evolution of depositional systems within each systems tract. This study provides a lake expansion–contraction scheme to divide a lacustrine stratigraphic sequence into systems tracts and highlights the feasibility of applying this approach in studying sequence stratigraphy along the steep margin of a lacustrine rift basin. The results also provide understandings for the development, distribution, and evolution of depositional systems and their controlling factors along the steep margin of other rift basins in the world.