The Lufeng 22 Sag is one of the most prospective new sags for exploration in the northern South China Sea. Elemental geochemistry, organic geochemistry, lithofacies assemblages and paleobiological characteristics of the Wenchang Formation were integrated to evaluate its resource potential. The sedimentary paleoenvironment of the Eocene Wenchang Formation was reconstructed for the first time in the Lufeng 22 Sag. Organic carbon content was combined to reveal the main controlling factors of organic matter enrichment, and support was provided for resource potential evaluation and oil exploration deployment in the new sags of the northern South China Sea. The results show that a freshwater to brackish water body is indicated under a warm and humid paleoclimate. Obvious differences in paleowater depth, paleosalinity and paleo-redox conditions are observed among the members. The deepest lake water was located in the upper part of the Wenchang 5 Member to the lower part of the Wenchang 3 Member. The water body was relatively shallow during the deposition of the Wenchang 1 to Wenchang 3 Members and the early stage of the Wenchang 5 Member, mainly characterized by weakly oxidizing to weakly reducing coastal shallow lake to deltaic environments with moderate paleoproductivity. In contrast, during the deposition of the Wenchang 4 Member, the water body was deeper and had the strongest reducing conditions, influenced by hydrothermal activity. The development of lower aquatic organisms led to the highest productivity, which is most favorable for the development of high-quality source rocks. The Wenchang 4 Member is characterized by semi-deep to deep lake facies source rocks, representing an advantageous stratigraphic position for near-source exploration. A positive correlation is observed between organic matter abundance and paleoproductivity, paleowater depth and paleo-redox conditions. Volcanic nutrient supply is favourable. Both productivity and preservation are identified as the dominant controls on the enrichment of high-quality source rocks.