The petrological and geochemical characteristics of Permian Shanxi Formation mudstones in Beijing were investigated to determine the provenance, paleoenvironment and tectonic setting of the rocks, which are mainly composed of clay minerals and quartz, with carbonate and feldspar as minor components. The carbonate content of the rocks has good correspondence with content of CaO and MgO. The SiO₂, Na₂O and K₂O are depleted whereas Al₂O₃, TiO₂ and Fe₂O₃^T are enriched, reflecting a basic source. The mudstones show homogeneous REE content, relative enrichment of LREE and depletion of HREE, with most obviously negative Eu anomalies, less or no Eu positive anomalies, and almost no Ce anomalies. The REE distribution patterns show that they have the same source rocks composed of sedimentary rock, granite and alkaline basalt from the upper continental crust of the northern margin of North China, as is also shown by the ratios of trace elements. They were deposited in a reducing environment with relatively deep water. The tectonic settings of the source area are continental island arc and active continental margin.