Recent fieldwork has extended the distribution of the Daohugou Bed deposits from the Daohugou Village to its several neighboring areas. The fossil-bearing Daohugou deposits uncomformably overlie complex bedrocks, and comprise three major parts. The red shales in the lower part were misidentified as belonging to the Tuchengzi Formation. Field excavation has indicated that the shales of upper part of the bed are the major fossil-bearing horizon. Due to strong tectonic activities, sediments were often folded with the sequences inverted in the region. Some newly recognized contacts between the Daohugou Bed and the volcanic rocks showed that the ignimbrite of the Tiaojishan Formation (159―164 Ma) underlies the Daohugou deposits, rather than overlying the latter as previously proposed. Thus, the age of the Daohugou deposits should be younger than the age of the ignimbrite, and thus it was incorrect to correlate the Daohugou Bed with the Middle Jurassic Jiulongshan Formation. Although biostratigraphic studies based on conchostracans and insects support a Middle Jurassic-early Late Jurassic age for the Daohugou deposits, vertebrate fossils such as Liaoxitriton, Jeholopterus and feathered maniraptorans show much resemblance to those of the Yixian Formation. In other words, despite the absence of Lycoptera, a typical fish of the Jehol Biota, the Daohugou vertebrate assemblage is closer to that of the Early Cretaceous Jehol Biota than to any other biota. We propose that the Daohugou fossil assemblage probably represents the earliest evolutionary stage of the Jehol Biota based on both vertebrate biostratigraphy and the sedimentological and volcanic features which suggest the Daohugou deposit belongs to the same cycle of volcanism and sedimentation as the Yixian Formation of the Jehol Group.