We study the coupled settling, deformation and mixing dynamics of a dense blob of fluid falling in an axially (vertically) linearly stratified Taylor–Couette cell (operated in a laminar stable regime). This configuration allows the independent analysis of stretching dynamics, driven by radial (horizontal) velocity variations, and settling dynamics, driven by buoyancy forces associated with vertical density variations. As the blob settles, it is stretched in the horizontal plane and forms an elongated lamella. Through the competing effects of transverse compression of the lamella due to this shear-induced stretching and broadening due to diffusion, the lamella irreversibly mixes with ambient fluid, thus progressively adjusting its own density towards that of the ambient fluid. Eventually, the lamella settling stops at a final equilibrium position that depends on the ambient vertical density gradient and the rate at which it has been deformed by the horizontal shear. We show how this final position is determined by stretching-enhanced diffusion, i.e. mixing. We demonstrate that a theoretical mixing model compares favourably with experiments with various Froude numbers (quantifying the relative strength of the horizontal shear and the vertical stratification) and construct a new criterion for the energetic ‘efficiency’ of this mixing process that explicitly captures its inherently diffusive character.