Abstract: The Yilan-Yitong faulted zone crosses obliquely the northeastern part of China. The Tertiary period was the graben-forming stage. With increasingly intense faulting, the graben followed the evolving style of sedimentation from the early graben-forming stage when the graben started to sink to the main subsidence stage and later graben-forming stage when the graben was levelled up. There were also regular variations in sedimentary environments within the graben. During the early graben-forming stage, volcanic eruption or river environments predominated, followed by river, swamp and lake environments. Four types are suggested for the sedimenttary evironments within the faulted zone. They are:(1)the swamp-lake-type exhibiting a continuous change from rivers through swamps to lakes during the early and middle graben-forming stages;(2)the swamp-type with a longer period of swamp development in the course of graben development;(3)the lake-type with a longer period of lake development, and;(4)the flood plain-type dominated by fluvial flood-plain environments. These environmental changes have an important effect on the biological evolution within the faulted zone. Geomorphically, the faulted zone displays a linear valley within which the climates might be relatively warm and humid than those on both sides, thus resulting in the differences in vegetation types in the faulted zone and on both sides. The faunal fossils were recognized mostly in the southern part of the faulted zone. The insects were many and diverse during the swamp development stage, whereas during the lake development stage, multiplied the fresh-water lacustrine biotas consisting of fresh-water fishes, molluscs, ostracods, insects and plants.