The framework sandbody of shallow water delta is favorable reservoir to lithologic hydrocarbon reservoir. The paleotopography, paleoclimate and paleo-water from Lower Member of Xiaganchaigou Formation (E3^1) in Houliuquan area of southwestern Qaidam Basin were analyzed by the means of palaeostructure recovery technique, and the main controlling factors of sandbody distribution were discussed. The results show that the paleostructure setting is a shallow and vast lake from E~ depositional period in Hongliuquan area of southwestern Qaidam Basin, the palaeosedimentary environment is relatively gentle slope, less than 10 m palaeo-water depth, turbulent water, frequently change of lake surface and adequate source, so the shallow water delta develops; the sandbody of shallow water delta is jointly controlled by flexure slope break and lake strandline; flexure slope break derived by the activity of Hongliuquan fault results in uplift area with low amplitude, which controls the bifurcation and rerouting of palaeo-water;lake strandline, which is the boundary of overwater and underwater environments, controls the distribution of distributary channel and underwater distributary channel in horizontal and responses the raising and reducing of relative lake surface in vertical, so that multiple reservoir- seal assemblages develop, and the diagenesis sandstone body trap with good plugging performance develops because of the effect of lake strandline on sandstone property.