Hydrous pyrolysis (HP) practiced on type-II kerogen-bearing oil shale samples from the Sargelu Formation in the Ghali-Kuh Area, western Iran, using a specially designed apparatus was performed at different temperatures (250–350°C), with hydrocarbon generation evaluated at each temperature. For comparison, the samples subjected to Rock-Eval pyrolysis before proceeding to HP resulted in Tmax = 418°C, HI = 102, and TOC = 4.33%, indicating immaturity and hence remarkable hydrocarbon (especially oil) generation potential, making them appropriate for HP. Moreover, the samples were deposited in a low-energy reductive marine environment, with maximum oil and gas generation (739 mg and 348 mg out of 50 g of rock sample, respectively) observed at 330°C and 350°C, respectively. The oil generated at 330°C was subjected to gas chromatography (GC) and isotopic analyses to assess hydrocarbon quality and composition. The hydrocarbon generation data was devised to estimate kinetic indices of the Arrhenius equation and to investigate the gas–oil ratio (GOR) and overall conversion yield. Based on the producible hydrocarbon quantity and quality, the findings contribute to the economic assessment of oil shales across the study area. The developed kinetic model indicates the history of hydrocarbon generation and organic matter (OM) maturity.