The lacustrine Dameigou organic-rich shale of the northern Qaidam Basin is a particularly promising play for recent unconventional oil and gas exploration in China. Deposition was associated with arid intervals during the otherwise humid Middle Jurassic, but the depositional mechanism and organic matter enrichment processes are poorly understood. This study integrates high-resolution organic and inorganic geochemical proxies with detailed sedimentary observations for samples from the Chaiye (CY1) borehole, located in the Yuqia Depression, to investigate the depositional environment and development of the Dameigou shales. Four major lithofacies, including sandy mudstones, oil shale, organic-rich mudstone, and argillaceous mudstone, were identified through detailed microscopic observation and mineralogical analyses. Geochemical paleoclimate proxies (CIA, Fe/Mn and Mg/Ca) indicate that humidity fluctuations primarily drove the lithofacies variation. Other geochemical proxies, including terrigenous supply (Al₂O₃, Ti₂O and regular sterane), lake salinity (Sr/Ba, S/TOC and Ga), redox conditions (V/Cr, U/Th and Pr/Ph), and primary productivity (Ba_xs, P_xs) indicate that climatic variability exerted a first-order control on the chemical evolution of the lake and the development of organic-rich shale in the Yuqia area. During arid intervals, fresh water supply through precipitation and river runoff weakened, leading to an increase in salinity and water column stratification. As a result, surface water became brackish and oxygen-rich, promoting growth of algae, but density stratification drove the bottom waters to anoxia, providing favorable conditions for organic matter preservation. Recycling of nutrients such as phosphorus under anoxic conditions further promoted eutrophication and high productivity in the surface water, which ultimately promoted the precipitation of carbonate minerals.