The Upper Triassic Hagong Formation distributed in the Shangri-La area, northwestern Yunnan Province consists of terrestrial conglomerate, sandstone, siltstone, and mudstone, in which a great number of chaotic blocks were developed. The Chert chaotic blocks yield Middle Devonian to Middle Triassic radiolarian fauna, as well as Middle Devonian tantaculites. The plankton assemblage of radiolarian and tentaculites and the geochemical features indicate that the Garz-Litang basin should have formed before Middle Devonian. The evolution of Garz-Litang basin could be divided into two stages according to the REE characters, slowly spreading stage from Middle Devonian to early Early Carboniferous and fast spreading and subduction stage from late Early Carboniferous to Middle Triassic. The basin provided a deep-water sedimentary environment in Late Triassic, even Jurassic.