The Luliang and Baoshan basins of Yunnan Province are two small-sized continental oil/gas-bearing sedimentary basins, which were developed at the bases of the Carboniferous and Devonian systems during the Late Tertiary, covering an area of 325 km(2) and 254 km(2), respectively. Since the 1990s, there have been discovered small-sized natural gas pools in these two basins. The natural gases are composed mainly of hydrocarbon gases, with nonhydrocarbons accounting for less than 2%. Of the hydrocarbon gases, methane accounts for more than 99%, and the components above C-2 account for less than 0.2%. On the basis of previous studies of geological background, the composition of natural gases and their carbon isotopic composition, it has been defined that these two gas pools are of bacterial origin. In this work we have comprehensively measured the carbon and hydrogen isotopic composition of natural gases from these two basins and have gone into the details of the mechanism of gas generation. The delta C-13(1) Values of natural gases from the Luliang Basin are within the range of -72.1 parts per thousand--73.3 parts per thousand, and the delta D-CH4 values, -242 parts per thousand--234 parts per thousand, indicating that the bacterial gas generation is dominated by the way of CO2 reduction. It has been evidenced that under continental-facies fresh water conditions there did occur the CO2 reduction as a process of bacterial gas generation. The delta C-13(1) values of natural gases from the Baoshan Basin are within the range of -62.5 parts per thousand--63.5 parts per thousand, and the delta D-CH4 values, -252 parts per thousand--260 parts per thousand. These isotopic characteristics are fallen into transitional phase of acetate fermentation and CO2 reduction as defined by Whiticar et al. (1986). An important discovery in the Luliang Basin is the carbon isotopic composition of ethane of purely biogenetic origin, i.e., its delta C-13(2) values are within the range of -61.2 parts per thousand--66.0 parts per thousand. These carbon isotopic values have been reported for the first time in China. As compared to the delta(13)C2 values of less than -55%. for the two cases encountered previously in the world, a significant difference is that in the latter two cases there are obvious signs of contamination caused by ethane of thermal origin. So it cannot be ruled out that the light delta C-13(2) values are the result of isotope fractionation of ethane of thermal origin. The delta C-13(2) values of natural gases from the Luliang Basin are all less there is almost no possibility that ethane of thermal origin migrated vertically and horizontally into gas pools within this basins. This demonstrates that in the Luliang Basin the ethane, whose delta C-13(2) values are within the range of -61.2 parts per thousand--66.0 parts per thousand, is of purely biogenic, hence providing scientific evidence that ethane can be produced by the bacterial process. This is an important discovery in natural science, and also provides clues to the comprehensive study of the mechanism of formation of ethane.