Various stromatolites, in form and structure, are developed in the Qaidam Basin, West China. In the sequence, the stroamtolites overlying the conglomerate grade into algal reef which integrates another relatively thin stromatolite bed. Based on the study on the internal lamination and fabrics combined with the analysis of isotopic, geochemical and fossil data, it is apparent that biofilm related calcification and microbial mediated precipitation produced the layered structures in dome form. Formation of these stromatolites in fluctuated lacustrine settings is attributed to higher temperature, hot and dry climate, availability of a hard substrate and reduced competition from algae. The low-energy stroamtolites and high-energy algal reefs are completely different from, and incompatible with each other. Fluctuated lacustrine conditions behave as a key role in stromatolites formation and preservation, and provide an optimal opportunity to study the stromatolites genesis and relation with algal reefs.