The Bayan Obo deposit is a giant Fe-Nb-REE deposit famous in the world. But its genesis, ore-forming time and ore-forming tectonic settings are in dispute because of complex evidences. Having reviewed comprehensively the published data, studied systematically in geology and geochemistry on the two key problems, the genesis of the ore-bearing dolostone and the time of ore-forming of the Bayan Obo deposit and the sedimentation of the Bayan Obo Group, writers derived a series of key evidences, and concluded that the ore-bearing dolostone should be mudmounds, formed by hydrothermal sedimentation, and that the ore-forming time should be Early Paleozoic. In this paper, it is reported that a specimen with a fossil of gastropods and a spongia simultaneously is discovered in the Sailinhudong Group which is correlated to the lower part of the Bayan Obo Group and that carbonates with veins and breccia formed by liquefaction in earthquake are discovered in the Bayan Obo Group in the orefield and adjacent area. So, writers believe that the tectonic settings of sedimentation of the Bayan Obo Group and ore formation of the Bayan Obo deposit should be passive continental margin.