Abstract: Two second-order sequences and nine third-order sequences may be identified for the Permian strata in the Simao Basin,Yunnan in the light of sequence boundary and condensed sections.The first second-order sequence boundary is represented by a tectonic-erosional unconformity which may be the best locus for the preservation of oil and gas.Since the sediments in the western part of the basin have been subjected to metamorphism,they have nothing to do with the source-reservoir-caprock associations throughout the basin.In the eastern part of it,the lowstand,transgressive and highstand systems tracts on the open carbonate platform have all contributed to good sites for the formation of reservoir rocks.The second second-order sequence boundary consists of transgressive and highstand systems tracts.As for the transgressive systems tract composed of the lower horizons of the Longtan Formation,the deep-water basin slope environments appear in the areas west of Yazi in western Pu'er while the shallow-marine environments east of it,and the littoral environments near the ancient land in the east.The lithology is,without exception,dominated by dark grey-greyish black mudstones which have excellent hydrocarbon potential.The highstand systems tract may be grouped into two types:early and later types.The early highstand systems tract is made up of the upper horizons of the Longtan Formation:shallow-marine sandstones and volcanic rocks as reservoir rocks in the west,and littoral plain in the east, where the dark grey and greyish black mudstones as good source rocks occur in the lower part while in the upper part the sandstones intercalated with volcanic rocks as reservoir rocks are accentuated.In the western part of the late highstand s ystems tract,limestone,dolomitic limestone and dolostone may serve as reservoir rocks.