The lacustrine to deltaic depositional systems of the Upper Jurassic Qigu Formation in the Yongjin area constitute a significant petroleum reservoir in the central Junggar Basin, China. Based on core observations, petrology analyses, paleoenvironment indicators and modern sedimentary analyses, sequence stratigraphy, lithofacies associations, sedimentary environment, evolution, and models were investigated. The Qigu Formation can be divided into a third-order sequence consisting of a lowstand systems tract (LST) and a transgressive systems tract (TST), which is further subdivided into six fourth-order sequences. Thirteen lithofacies and five lithofacies associations were identified, corresponding to shallow-water delta-front deposits. The paleoenvironment of the Qigu Formation is generally characterized by an arid freshwater environment, with a dysoxic to oxic environment. During the LST depositional period (SQ1–SQ3), the water depth was relatively shallow with abundant sediment supply, resulting in a widespread distribution of channel and mouth bar deposits. During the TST depositional period (SQ4–SQ6), the rapid rise in base level, combined with reduced sediment supply, resulted in swift delta retrogradation and widespread lacustrine sedimentation. Combined with modern sedimentary analysis, the shallow-water delta in the study area primarily comprises a composite system of single main channels and distributary channel-mouth bar complexes. The channel-bar complex eventually forms radially distributed bar assemblages with lateral incision and stacking. The distributary channel could incise a mouth bar deeply or shallowly, typically forming architectural patterns of going over or in the mouth bar. Reservoir test data suggest that the mouth bar sandstones are favorable targets for lithological reservoir exploration in shallow-water deltas.