Deposits in the lake center, transitional steep slope, and marginal slope of the early Permian alkaline lacustrine system of the Mahu sag, Junggar Basin, have been studied via organic petrology and organic geochemistry to identify high-quality source rocks and investigate potential controlling factors. Organic geochemical data demonstrate that source rocks deposited on the steep slope and on the gentle slope show higher total organic carbon, higher Rock-Eval generatable hydrocarbon and hydrogen index values, and lighter carbon isotopes of kerogen than those deposited in the lake center. Organic petrology results show (1) enrichment of lamalginite in dolomitic laminae of the steep slope, (2) abundant alginite and sporinite in tuffaceous laminae of the gentle slope, and (3) only minor alginite relics and bituminite in evaporite-rich sediments of the lake center. Therefore, the lake slope sediments of the Fengcheng Formation have better source-rock quality than the central sediments, which differs from the predicted lacustrine source-rock models that place the organic-richest sediments in lake centers. The Mahu sag lake center deposits show strong microbial reworking and contain a high proportion of evaporite minerals, which dilute the organic matter. On its two slopes, shrinkage cracks and erosive surfaces indicate a shallow-water setting for the deposition of alginite-rich sediments. These shallow-water organic-rich sediments could be formed and preserved through (1) local hydrothermal input linked to normal faults, (2) a strong stratified water column related to lateral salinity variations, (3) early silicification of microbial mats induced by evaporation, and (4) high water alkalinity.