The ancient Loulan kingdom in northwest China was a key transportation hub along the ancient Silk Road. What determined the burial practice in Loulan is a mystery as many of the tombs were constructed atop approximately 20-m-high yardangs in the north of the ancient city of Loulan. This paper includes the first attempt to provide a geoarchaeological perspective on this problem. A representative section (3.8 m) from the tomb area was investigated using optically stimulated luminescence (OSL) dating and grain size analyses to reconstruct environmental changes. Results show that the section was formed during Loulan's early development stage (approximately from the second century BC to the first century AD) in the wake of lacustrine-fluvial hydrology fluctuation. Radiocarbon dating suggests that the tombs were also constructed during the period. Therefore, our reconstruction indicates that the landscape of the burial area was dominated by extensive island-like yardangs within a lake or wetland. We argue that the burial practice was influenced by the yardang's location high above the wetland/flooded area. People would generally prefer cemeteries in the area to avoid disturbance to the bodies from the fluctuating water table.