By investigating relevant Buddhist scriptures and images, this paper concludes that the scenes of Buddha’s preaching on both the north and south walls in Mogao cave 207 depict the scene of the Budddha’s First Sermon. Ananalytical study of the details in the two First Sermon scenes suggests that the iconographical elements are very similar to those in the Bezeklik Grottoes in Xinjiang and can also be traced back to the Gandharan sculptures of the same themes. These two paintings, which occupy the entire side wall of Cave 207 and were renovated during the period of Uighur rule, are the most recent preservation of the First Sermon available and evince a complex iconographical arrangement based on the combination of both Mahayana and sectarian Buddhist thought.