Through introduction to geological characteristics of strata, rocks and structure, geological characteristics of deposit and ore quality of Xiaotun gypsum deposit are analyzed. Xiaotun gypsum deposit is a small scale gypsum deposit firstly found in Ordovician Donghuangshan section in Shandong province with mining industry value after a detailed investigation. Discovery of the deposit exceeded the previous geological knowledge and widened the searching scope of gypsum deposit. It will provide some references for searching gypsum deposits with the same type in the future.