Abstract: The Shan₂ ³ Sub-member transitional facies shale of the Permian Shanxi Formation in the eastern margin of the Ordos Basin is a crucial target for future unconventional oil and gas exploration. Based on field outcrop observation, core description and thin-section identification, combined with X-ray diffraction, trace elements test and other analyses, four types of shale lithofacies were identified, including siliceous, siliceous-argillaceous, calcareous-siliceous (or siliceous-calcareous) and argillaceous lithofacies. The petrological characteristics and geochemical indicators show that the depositional environment of the Shan₂ ³ Sub-member inherited the epicontinental sea pattern with relatively gentle topography of the late Taiyuan Epoch. The large-scale transgression led to the rapid evolution of the study area into a bay environment in the early depositional stage of the Shan₂ ³ Sub-member. Thus, the sedimentary environment changed from oxidation to reduction. The salinity of the water body was close to normal seawater, and the preservation conditions for the organic matter were favorable, forming organic-rich shale lithofacies in the lower part of the Shan₂ ³ Sub-member. The calcareous-siliceous (or siliceous-calcareous) lithofacies are relatively high-quality organic-rich shale lithofacies with high TOC, brittle minerals, and low clay content; and are favorable for shale gas development. In the late depositional stage of the Shan₂ ³, the study area gradually evolved into a barrier island depositional system. Siliceous-argillaceous and argillaceous lithofacies developed in lagoon and coastal swamp environments. Though affected by multi-stage marine transgressions, seawater’s influence gradually weakened, water salinity decreased, the sedimentary environment tended to be oxidized, and organic matter preservation conditions worsened.