Soils derived from the Loess Plateau of China are regionally important and expression of the soil properties along the soil profile may be directly related to climate changes. The objective of this research was to analyze the clay mineral transformation of loess from the southernmost Loess Plateau, in relation to the pedogenesis and the regional climate changes. The mineralogy of the soil profile at the site was studied by using X-ray diffraction. The results showed that 2:1 layer type minerals dominated with the illite in the majority throughout the profile. The changes of the soil minerals were consistent with the soil genetic horizons and with the variable CaCO3 content, particle size distribution, and variations of magnetic susceptibility. A relatively high vermiculite content and the presence of hydroxyl-interlayered mineral (HIM) occurred in the most weathered horizon (50–150 cm) corresponding to the buried palaeosol (S0) formed during the ‘optimum’ Holocene (8400–3100 B.P. yr) which indicated the acidic conditions with low organic matter in this period. During the formation of palaeosol, the expected transformation of illite and chlorite into vermiculite through the formation of mixed layers has occurred. The distribution of kaolinite was uniform with depth in the palaeosol suggesting inheritance from the original eolian deposition materials. Generally, the depotassication of illite and the degradation of chlorite were the major mineral transformation processes that occurred with soil-formation. Calculation of the total amount of carbonate leaching of the palaeosol suggested that the annual precipitation during the ‘optimum’ Holocene was probably approximately to 880 mm. The regional climate during the ‘optimum’ Holocene on the southernmost Loess Plateau was analogous with the modern climate conditions in the northern subtropical zone (the southern slope of Qingling Mountains) for the formation of Udic Luvisols (Brown Soil). However, as a result of its specific pedogenic pattern, the pedogenic strength of the palaeosol did not reached the level of Udic Luvisols (Brown Soil). The hydroxyl-interlayered mineral presence in the 50–150 cm horizon only, also illuminated that the palaeosol was buried rapidly by post depositional loess during the abrupt cold-dry climate in the late Holocene. The contradiction between the type clay minerals present and the measured alkaline soil pH values in the palaeosol could be understood by the recalcification caused by the post-pedogenic leaching from the overlying loess.