The Chaiwopu Depression in the southern Junggar Basin is located between the West Bogda Mountains and the northeastern Tian Shan Mountains in northwest China. The intracontinental basin–mountain system was formed in the Central Asian Orogenic Belt during the Late Paleozoic. The Permian strata around the depression exhibits distinct variations, which provide significant information to understand its tectonic and depositional evolution. This study investigated six outcrop sites using lithological, sedimentological, and geochemical analyses. The representative lithology of the Lower Permian is submarine lava and pyroclastic flows on the northern margins and alluvial deposits near the southern margins. In the Middle Permian sequence, the extensive distribution of alternating shale and silt/sandstone with oil shale and carbonate indicates a lacustrine setting. The sediments are composed of felsic rock-forming minerals derived mainly from island arc settings. The source rock properties correspond to the Carboniferous volcanic terrain of northeastern Tian Shan. The Lower to Middle Permian source-to-sink system occurred in an incipient level of weathering and maturation, a simple recycling process, and arid to semi-arid climatic conditions. The characteristics and changes of the depositional environment and provenance can be understood in terms of implications of tectono-paleogeographic evolution associated with the West Bogda rifting and uplift.