Based on core observation, thin section and SEM analysis and seismic interpretation of the Paleogene in western Qaidam basin, the study on sequence stratigraphy and forecast  of subtle oil reservoirs of the Paleogene was completed. The  basement structural framework and large deep faults in different locations and related palaeogeography and climate controlled distribution of sedimentary facies. The basin tectonics controlled sedimentary evolution obviously. Multiple unconformities led to multiple clastic sediment supplies to the basin, but the  supply was not sufficient to fill up the basin. Continuous existence of accomodation space led to well-developed lacustrine transgressive system tracts(LTST).  During deposition of lacustrine transgressive systems tracts,  the oil reservoirs and pools related to LTST were easily formed in the Paleogene of western Qaidam basin, which included delta front sandstone updip wedging-out lithologic pools, carbonate fissure pools, deep-lake turbidite pools, subtle pools near to sequence boundary and composite subtle pools controlled by structure and fault.