We performed mineralogical and geochemical analyses of core samples from the Lenghuqi area in the northern marginal tectonic belt of the Qaidam Basin. The clay mineralogy of the Xiaganchaigou Formation sandstone is dominated by I + I/S + C types and characterized by high illite, a higher mixed-layer illite/smectite and chlorite, lesser smectite, and an absence of kaolinite. The clay minerals reflect that the Oligocene sedimentary basin formed in an arid-semi-arid climate with weak leaching and chemical weathering, and that diagenesis occurred in a K⁺- and Mg²⁺-rich alkaline environment. Measured major oxide concentrations show clear correlations. The lower Xiaganchaigou Formation is representative of a dry and cold freshwater sedimentary environment, whereas the upper Xiaganchaigou Formation is warmer and more humid. Trace element and rare earth element variations indicate that the paleoclimate conditions of the lower Xiaganchaigou Formation sedimentary period were relatively cold and dry, while the upper Xiaganchaigou Formation formed under warmer and more humid climate conditions. These findings reflect a global climate of a cold and dry period from the late Eocene to early Oligocene, and a short warming period in the late Oligocene.