AbstractA diglycolamide based extractant namely tetra‐2‐ethylhexyl diglycolamide [TEHDGA] has been synthesized and characterized for extraction of rare earths from coal fly ash (CFA). The formation rare earth‐TEHDGA complex in the organic phase was determined from slope analysis method. The same structure was further corroborated by the density functional theoretical calculation. Furthermore, DFT approach was adopted to explain the relative stability of rare earth complex with TEHDGA over other matrix elements like Fe, Ca, Al, Mg of CFA by determining their free energy of extraction. The calculated selectivity trend from the free energy of extraction is obtained after consideration of 1 : 3 stoichiometry for Europium – the representative of all rare earth elements. Thus the correct selectivity order was established from a combined experimental and density functional theoretical studies.