A new species of castorids, Propalaeocastor irtyshensis, n.sp., from the Burqin Basin of Xinjiang Uygur Autonomous Region, China, is described. The new species, represented by a right maxilla with well-preserved P4–M3, is the earliest and northernmost occurrence of castorids in China. It is characterized mainly by the cheek tooth crown being higher than that of P. butselensis but lower than that of Steneofiber aff. dehmi (probably a new species of Propalaeocastor), and by lingual confluence of the mesoflexus to the lingual fossette of the premesoflexus. Comparison with known species previously assigned to Steneofiber from Europe and Kazakhstan leads to the conclusion that the early Oligocene forms previously assigned to the genus, such as “S. butselensis” and “S. kazachstanicus”, differ significantly from those represented by S. eseri from the Late Oligocene and Early Miocene of Europe. We consider Propalaeocastor a valid genus, provide an emended diagnosis for it, and discuss its evolutionary trend in relation to Steneofiber. Preliminary analysis of Burqin fauna suggests an age of early Early Oligocene. Faunal transformations across the Eocene–Oligocene boundary in the Burqin region are comparable to those of Europe and the Mongolian Plateau and suggest linkage of faunal turnovers and global climate changes.