The Permian strata in Southwest Tarim Basin have organic reef with good exploration prospects. Based on outcrop observations and thin section examination of the Permian keziliqiman formation reef in Sangzhu section in Pishan County, Xinjiang, this paper explores the basic characteristics of the reef. Keziliqiman reef is a point reef that grew parallel to the platform margin, and consists of a base, a core, a high-energy front, a low-energy back and a cap sub-facies. The lithology of the reef core close to the high-energy front is mainly coral skeleton rock, and that of the reef core close to the low-energy back is mainly sponge barrier rock. The development of the reef was subject to the rise and fall of the sea level; it emerged when the sea level rose in southwest Tarim Basin, and disappeared when the sea level fell rapidly. For the fall of the sea level reduced the Sangzhu area to a hot and dry supratidal zone where algae began to flourish, dolomitization intensified, and then reef building organisms died en masse. Paleontological and geochemical characteristics of the Sangzhu reef indicate that the sea-level fall in southwest Tarim Basin was probably related to the early Permian glaciation. When there were no more building organisms, the Keziliqiman reef began to be transformed by diagenesis. Overall, the impact of diagenetic transformation on it was rather small. Furthermore, its diagenetic process had more to do with marine fluids in its sedimentary period than with non-marine fluids, for non-marine fluids was powerful enough to affect biodetritus but powerless to affect argillaceous matrix.