Abstract The Kazhdumi Formation of the Bangestan Group is a well-known source rock that has produced abundant oil in most petroleum fields in the Zagros Basin, which stretches from northwest to southwest Iran over hundreds of kilometres. The formation reaches a thickness of 230 m at the type section in northwest Zagros but thins out to 40–50 m in wells studied from the South Pars giant petroleum field, where it comprises mainly grey shales with occasional intercalations of marls and sandstones. South Pars, best known as the Iranian part of the world's largest non-associated gas field, contains small quantities of oil above and below the Kazhdumi Formation. Palynology has been used to assess the age and palaeoenvironment of the Kazhdumi Formation and to evaluate its petroleum potential. A total of 68 ditch cutting samples recovered from five wells, of which four are oil-prone, have been analyzed. An age between late Albian and Cenomanian is established for the formation based on dinoflagellate cyst biostratigraphy, and four palynofacies types have been recognized using the relative proportions of terrestrial elements, marine palynomorphs and amorphous organic matter (AOM). The ratio of terrestrial to marine elements is high in most samples, indicating a nearshore sedimentary environment. Twenty-two samples from the four oil-prone wells were also selected for geochemical analysis using Rock-Eval pyrolysis. Results show that the Kazhdumi Formation at South Pars, in contrast to the Zagros Basin, is gas-prone (predominantly type III kerogen), thermally immature, and poor in terms of hydrocarbon generation. It could not have produced the oil in those oil-prone wells studied.