The group of Paleogene in Xihu Sag in Donghai Basin contains Huagang Formation，Pinghu Formation and Baoshi Formation，which not only are the important layers but also the layers where hydrocarbon source rocks developed well. Predecessors made a great deal of studies on sedimentary environment in Xihu Sag， but different people have different view-point to Pinghu Formation. Through the study on themicrofossil data （spore and pollen，calcareous nannofossils， ostracods，oraminifera， pediastrum，marine dinoflagellates etc.） in BS- 1，CHX- 1，TWT- 1， DQ- 1，PH- 1 and NB2- 1- 1 well in Xihu Sag, it is believed that Huagang Formation should be terrestrial deposit, with marine deposit in middle and lower part and terrestrial deposit in the upper part, and Baoshi Formation should be terrestrial deposit. It is deduced that Paleogene should be the subtropical climate.