The oil-rich Damintun Depression is located in the Liaohe Basin, Northeast China, and was formed during the Paleogene. The major oil-producing strata in the depression are mudstone and shale. To explore the burial diagenetic history of the basin and the formation thresholds of hydrocarbons, the characters of the kaolinite subgroup minerals and mixed-layer illite/smectite in the mudstone and the shale are studied by using X-ray diffraction, electron probe, scanning electron microscope, and Fourier infrared spectrum. The kaolinite subgroup consists of kaolinite and halloysite. The kaolinite is flake-like or vermiform-like. The halloysite is in long tubular shape and its length is related to its iron content. A longer tube has lower iron content. The crystallinity of kaolinite is 0.40 °2θ, and its degree of order increases from 0.03 to 1.17 with the burial depth. Kaolinite is in disorder when the buried depth is less than or equal to 2479 m , and it is partially ordered when the buried depth is greater than 2479 m. Kaolinite is supposed to turn into dickite when the depth is greater than 2550 m, but low penetrability and low porosity of the shale and mudstone prevent such a change. The mixed-layer illite/smectite changes from disorder to order continually as the buried depth increases. Its disorder (R0I/S), as defined by illite layer content (I%), is smaller than 50% at depths less than 2550.25 m. Based on Hoffman & Hower’s model, the paleo-geothermal gradients of 3.37–3.76°C/100 m (3.57°C /100 m on average) can be derived in the Paleocene Damintun Depression, which is significantly higher than the present geothermal gradient (2.9°C/100 m). The threshold depth of the oil formation in the depression is about 2550 m. The oil-rich Damintun Depression is located in the Liaohe Basin, Northeast China, and was formed during the Paleogene. The major oil-producing strata in the depression are mudstone and shale. To explore the burial diagenetic history of the basin and the formation thresholds of hydrocarbons, the characters of the kaolinite subgroup minerals and mixed-layer illite / smectite in the mudstone and the shale are studied by using X-ray diffraction, electron probe, scanning electron microscope, and Fourier infrared spectrum. The kaolinite subgroup consists of kaolinite The halloysite is in a long tubular shape and its length is related to its iron content. A long tube has a lower iron content. The crystallinity of kaolinite is 0.40 ° 2Θ, and its degree of order increases from 0.03 to 1.17 with the burial depth. Kaolinite is in disorder when the buried depth is less than or equal to 2479 m, and it is partially ordered when the buried depth is greater than 2479 m. Kaolinite is supposed to turn into dickite when the depth is greater than 2550 m, but low penetrability and low porosity of the shale and mudstone prevent such a change. The mixed-layer illite / smectite changes from disorder to Its disorder (ROI / S), as defined by illite layer content (I%), is smaller than 50% at depths less than 2550.25 m. Based on Hoffman & Hower’s model, the paleo-geothermal gradients of 3.37-3.76 ° C / 100 m (3.57 ° C / 100 m on average) can be derived in the Paleocene Damintun Depression, which is significantly higher than the current geothermal gradient (2.9 ° C / 100 m). The threshold depth of the oil formation in the depression is about 2550 m.