Abstract: The Upper Paleozoic in the Wulangar Region, Inner Mongolia is more than 400m thick. Most of sandstones belongs to the reservoir of compact type with low porosity and poor permeability. This paper deals with the diagenesis of sandstones and their influence on porosity and permeability. Four stages of diagenesis are generalized as follows: 1. Mechanical compaction of grains and early cementation; 2. Cementation and metasomasis by carbonate minerals. 3. Corrosion of Minerals (mostly carbonate cement or feldspars). 4. Formation of late authigenic clay minerals and recrystallization of early clay minerals. The analysis of diagenetic evolution indicate that intense mechanical compaction led to the decrease in the pores in the sandstones, especially cementation of the carbonate minerals obviously reduced the porosity and permeability. Hcwever, late corrosion of the cements and partial grains is a favourable factor, which improved the reservoir property of several segments.