We selected the two Holocene shallow surface sediments (depths of 1.42–1.48 and 1.56–1.62 m) of Shaobo Lake in Yangzhou City, Jiangsu Province, China, to analyze the geochemical characteristics and hydrocarbon generation ability of organic matter (OM) from its raw state to the formation of kerogen. We have used the Rock-Eval (RE) VI, low-temperature hydrous pyrolysis, and macerals identified under microscopy to test the whole-rock samples, as well as gas chromatography-mass spectrometry and gas chromatography analysis of the pyrolysis oil and pyrolysis gas. The results indicate that the surface sediments had poor to fair gas-prone hydrocarbon generation potential and that the type of insoluble OM was III-IV. The macerals were dominantly vitrinite, followed by sapropelic amorphogen. Bulk geochemistry data and biomarker compositions indicated that the studied samples deposited in a lacustrine environment with suboxic to anoxic conditions and OM of mixed plankton, bacterial, and land plant origin. RE data and the biomarker index suggested that unheated and thermally simulated samples were from immaturity to just entering the maturity stage. Under the thermal simulation conditions of 250°C–450°C, a peak of pyrolysis oil appeared at 300°C, and the yield increased slowly after 350°C. At 300°C, the hydrocarbon gas (C1–C5) began to produce. As the simulated temperature increased, the yield (in volume) of the hydrocarbon gas increased exponentially and the methane content was also gradually enriched. In general, thermal simulation experiments indicated that the OM could generate slight hydrocarbon from the death of living organisms to early diagenesis.