Abstract: The Permian of Southern Hubei as a possible source rock is discussed in the light of sedimental environments and geochemical criteria. Based on the various criteria of hydrocarbon evolution such as burial depth, geothermal gradient, change of abundance of OM with depths, characteristic feature of DTA curve of kerogen, colour of conodonts, carbon isotope ratios of natural gases, etc. The evolution of OM in the Permian is discussed and divided into three substages, Late stage, last stage and last-destroyed stage. Hence an assessment of the oil and gas prospects of the Permian in Southern Hubei is made.