The Early Permian period is marked by a series of glacial-interglacial cycles that left imprints on atmospheric CO2 levels, sea levels, and high-latitude ice sheets. Within this timeframe, the Shanxi Formation in the North China Plate (NCP) became host to the development of numerous economically significant coal seams. In an effort to elucidate the depositional processes and key factors influencing the formation of these coal seams, we undertook a comprehensive sedimentological and geochemical investigation of the Shanxi Formation in the Liujiang Basin, part of the NCP. Our study identified four facies associations-braided fluvial, delta plain, delta front, and swamp deposits-as well as three third-order depositional sequences within the Shanxi Formation. The economically vital coal seams #3 and #2 were found to have formed during the late TST (transgressive systems tract) of SIII1 and the early TST of SIII2, respectively. Geochemical analysis of mudstone samples suggests that the Shanxi Formation was predominantly deposited under warm and humid glacial climatic conditions and in brackish water environments, with a gradual decrease in paleodepth from the base to the top of the formation. A distinct interval of hot and arid climate was identified during the early TST of SIII1, correlating with the Artinskian Warming Event (AWE). We propose that the warm and humid climate characteristic of low-latitude regions during Glaciation P2 was the predominant controlling factor for coal accumulation, while the hot and arid interglacial climate was detrimental to the growth of coal-forming vegetation and the preservation of peat.