Oil shale is an organic-rich fine-grained sedimentary rock containing kerogen (a solid mixture of organic chemical compounds) from which liquid hydrocarbons can be produced. In addition to kerogen, general composition of oil shales constitutes inorganic substance and bitumens. Based on their deposition environment, oil shales are classified as marine, lacustrine and terrestrial oil shales. Oil shales differ from oil-bearing shales, shale deposits that contain petroleum (tight oil) that is sometimes produced from drilled wells. Examples of oil-bearing shales are the Bakken Formation, Pierre Shale, Niobrara Formation, and Eagle Ford Formation. Accordingly, shale oil produced from oil shale should not be confused with tight oil, which is also frequently called shale oil.

A 2016 estimate of global deposits set the total world resources of oil shale equivalent of 6.05 trillion barrels (962 billion cubic metres) of oil in place. Oil shale has gained attention as a potential abundant source of oil. However, the various attempts to develop oil shale deposits have had limited success. Only Estonia and China have well-established oil shale industries, and Brazil, Germany, and Russia utilize oil shale to some extent.

Oil shale can be burned directly in furnaces as a low-grade fuel for power generation and district heating or used as a raw material in chemical and construction-materials processing. Heating oil shale to a sufficiently high temperature causes the chemical process of pyrolysis to yield a vapor. Upon cooling the vapor, the liquid unconventional oil, called shale oil, is separated from combustible oil-shale gas. Shale oil is a substitute for conventional crude oil; however, extracting shale oil is costlier than the production of conventional crude oil both financially and in terms of its environmental impact. Oil-shale mining and processing raise a number of environmental concerns, such as land use, waste disposal, water use, waste-water management, greenhouse-gas emissions and air pollution.

Oil shale, an organic-rich sedimentary rock, belongs to the group of sapropel fuels. It does not have a definite geological definition nor a specific chemical formula, and its seams do not always have discrete boundaries. Oil shales vary considerably in their mineral content, chemical composition, age, type of kerogen, and depositional history, and not all oil shales would necessarily be classified as shales in the strict sense. According to the petrologist Adrian C. Hutton of the University of Wollongong, oil shales are not "geological nor geochemically distinctive rock but rather 'economic' term". Their common defining feature is low solubility in low-boiling organic solvents and generation of liquid organic products on thermal decomposition. Geologists can classify oil shales on the basis of their composition as carbonate-rich shales, siliceous shales, or cannel shales.

Oil shale differs from bitumen-impregnated rocks (other so-called unconventional resources such as oil sands and petroleum reservoir rocks), humic coals and carbonaceous shale. While oil sands do originate from the biodegradation of oil, heat and pressure have not (yet) transformed the kerogen in oil shale into petroleum, which means its maturation does not exceed early mesocatagenetic. Oil shales differ also from oil-bearing shales, shale deposits that contain tight oil that is sometimes produced from drilled wells. Examples of oil-bearing shales are the Bakken Formation, Pierre Shale, Niobrara Formation, and Eagle Ford Formation. Accordingly, shale oil produced from oil shale should not be confused with tight oil, which is called also frequently shale oil.

General composition of oil shales constitutes inorganic matrix, bitumens, and kerogen. While the bitumen portion of oil shales is soluble in carbon disulfide, the kerogen portion is insoluble in carbon disulfide and may contain iron, vanadium, nickel, molybdenum, and uranium. Oil shale contains a lower percentage of organic matter than coal. In commercial grades of oil shale the ratio of organic matter to mineral matter lies approximately between 0.75:5 and 1.5:5. At the same time, the organic matter in oil shale has an atomic ratio of hydrogen to carbon (H/C) approximately 1.2 to 1.8 times lower than for crude oil and about 1.5 to 3 times higher than for coals. The organic components of oil shale derive from a variety of organisms, such as the remains of algae, spores, pollen, plant cuticles and corky fragments of herbaceous and woody plants, and cellular debris from other aquatic and land plants. Some deposits contain significant fossils; Germany's Messel Pit has the status of a UNESCO World Heritage Site. The mineral matter in oil shale includes various fine-grained silicates and carbonates. Inorganic matrix can contain quartz, feldspar, clay (mainly illite and chlorite), carbonate (calcite and dolomite), pyrite and some other minerals.

Another classification, known as the van Krevelen diagram, assigns kerogen types, depending on the hydrogen, carbon, and oxygen content of oil shales' original organic matter. The most commonly used classification of oil shales, developed between 1987 and 1991 by Adrian C. Hutton, adapts petrographic terms from coal terminology. This classification designates oil shales as terrestrial, lacustrine (lake-bottom-deposited), or marine (ocean bottom-deposited), based on the environment of the initial biomass deposit. Known oil shales are predominantly of aquatic (marine, lacustrine) origin. Hutton's classification scheme has proven useful in estimating the yield and composition of the extracted oil.

As source rocks for most conventional oil reservoirs, oil shale deposits are found in all world oil provinces, although most of them are too deep to be exploited economically. As with all oil and gas resources, analysts distinguish between oil shale resources and oil shale reserves. "Resources" refer to all oil shale deposits, while "reserves" represent those deposits from which producers can extract oil shale economically using existing technology. Since extraction technologies develop continuously, planners can only estimate the amount of recoverable kerogen. Although resources of oil shale occur in many countries, only 33 countries possess known deposits of potential economic value. Well-explored deposits, potentially classifiable as reserves, include the Green River deposits in the western United States, the Tertiary deposits in Queensland, Australia, deposits in Sweden and Estonia, the El-Lajjun deposit in Jordan, and deposits in France, Germany, Brazil, China, southern Mongolia and Russia. These deposits have given rise to expectations of yielding at least 40 liters of shale oil per tonne of oil shale, using the Fischer Assay.