The Songliao Basin is the largest oilfield in China and across southeast Asia. The Upper Cretaceous Qingshankou and Nenjiang Formations in the basin comprise the source rocks for conventional oil and gas, as well as the primary exploration target for shale oil. Although the lacustrine organic-rich shale (LORS) in the first member of Nenjiang Formation (K(2)n(1)) from the southern Central Depression is characterized by high organic matter (OM) abundance and the dominance of oil-prone kerogen, a study on the algal-microbial community, paleoenvironment, and shale oil potential of them is still lacking. Here, we address these issues based on the integration of bulk geochemical, organic petrographic, biomarker, scanning electron microscopic, and nitrogen gas adsorption analyses. The algal-microbial community was mainly composed of red algae, green algae, and dinoflagellates, together with bacteria and a minor proportion of land plants in the paleolake, which might be favorable for OM productivity. Saline to brackish and anoxic to dysoxic conditions were present in the paleolake, which were conducive to OM preservation. Both the favorable OM productivity and preservation conditions resulted in deposition of the K(2)n(1) LORS, which was characterized by high total organic carbon (TOC) contents and the dominance of oil-prone kerogen (type I). However, limited hydrocarbon generation potential of shale oil was present in the K(2)n(1) LORS, because of the relatively low maturity (early oil window maturity). Nano- to micrometer pores, including interparticle pores, intracrystalline pores, dissolution pores, and OM pores, formed two types of pore structures and pore size distributions in the K(2)n(1) LORS. In comparison with LORS from the first member of Qingshankou Formation (K(2)qn(1)) in the study area, the K(2)n(1) LORS displays higher TOC and HI values, lower OSI and T-max values, and a higher Brunauer-Emmett-Teller surface area and Barrett-Joyner-Halenda pore volume. The favorable area of shale oil in the K(2)n(1) LORS is proposed based on the integration of OM abundance, type, and maturity. In addition, the K(2)n(1) LORS buried with a depth of <1000 m may have great oil shale potential, which is suitable for in situ conversion processing. However, further research on the planar distributions of oil yield, shale thickness, underground water, laminar fractures, and OM pores of the K(2)n(1) LORS are needed. This work is not only beneficial for paleoecological reconstruction in the Songliao Basin during the K(2)n(1), but also provide guidance for regional unconventional hydrocarbon exploration in the future.