A layer of oolitic hematite deposit occurs at the bottom of the Carboniferous Zongchanggou Formation in Longmenshan, Sichuan Province. The ferruginous oolith within it consists of various nuclei and concentric lamellar shells. The oolith nuclei are mainly comprised of hematite intraclast, fragmentized oolith shells or hematite that contains terrigenous quartz sand. The obvious differences of colors and components exist between the oolith lamellar shells composed of hematite and those composed of kaolinite. The lamellar shells can be divided in color into dark black, ferruginous red and white, with the corresponding Fe2O3 content of the lamellar shells being 39.472%～8.200%, 12.988%～24.275% and 3.617%～9.230% respectively. An analysis of components, texture and relative characteristics of oolitic hematite enables us to make an estimation. It is held that the oolitic iron was formed in a semi-closed or closed barrier lagoon environment. The iron and aluminum weathering crust formed in late Yanguan stage provided the material foundation for the generation of oolitic hematite.