Abstract: There is a series of Ceno-Mesozoic basins located to the north of Nan-Ling, to the south of Yinshan and to the east of western He-Nan in eastern China. Recently, marine fossils have been found one after another in the Paleogene of these basins, the fact reflects that the sediments in the Paleogene are not exclusively non-marine ones. The marine fossils and their embedded layers show the definite distributive ragula-rity as follows: (l)Laterally, they appear in the basins or depressions near present- major river systems, which were possibly connected with the sea in ancient times. ( 2 ) vertically, the marine fossils are only found in a few horizons of small thickness within the Paleogene and can be related to the period when the water bodies of these basins extended with increased salinity. It is inferred that these marine fossils resulted from the ingression of sea water. ( 3 ) The marine fossils are discontinuous each other among basins but their horizons are stable. The above mentioned characteristics imply that the Paleogene of Eastern China was deposited in many down-faulted or down-warped lacustrine and swampy basins which were drained through major river systems connected with the sea, and thus might be invaded by sea water. In this paper this kind of special sedimentary environment is called "Paralic island-lake system", characterized by the ingression of sea water due to the relative rise of sea level. The deposition in the basins or depressions of paralic island-lake system was probably controlled or affected by the global cycles relative changes of sea level. The development of Paleogene paralic island-lake environment in Eastern China and the invasion of sea water can be attributed to the diktyogenesis of the Chinese continental margin from late Yenshanian to early HIMALAYA. This diktyogenesis brought about the development of the paralic island-lake system occupying a vast area of relative low attitude and sharp relief.In addition, the opening of the Japan Sea Basil provided the necessary condition for the ingression of sea water which was responsible for the deposition of the Paleogene marine fossils bearing horizons in Eastern China. Paralic island-lake system is a kind of sedimento-tectonic environment favoura ble to the generation and accumulation of oil and gas. The sedimento-tectonic circumstance including the conversion of faultdown to warpdown, the sharp relief, and the transgression/regession of waterbody involving sea water invasion determined the sedimentary strata of paralic island-lake system, which were composed of multiple source beds, mainly with mixed type organic matter, multiple reservoirs of various types, multiple forms of trap and multiple kinds of oil/gas pool. In a word, the environment of paralic island-lake system possesses a favoured condition in respect of petroleum geology