This paper reports petrology, major and trace element content, and Fe isotopic composition of minerals from a suite of spinel lherzolites entrained in the Cenozoic Niutoushan basalt from the Cathaysia block, South China. The aim is to constrain the nature and evolution of the lithospheric mantle, as well as the factors controlling the fractionation of Fe isotopes beneath the Cathaysia block, South China. Based on the petrographic features and mineral compositions, the Niutoushan spinel lherzolite can be subdivided into two groups. Group 1 lherzolite has a high olivine Fo content (89.3 to 90.6) and both LREE-depleted and LREE-enriched chondrite-normalized REE patterns in clinopyroxene grains, reflecting variable degrees of partial melt extraction (up to 20%) followed by a multistage metasomatic history. The Fe isotopic composition of Group 1 lherzolite minerals shows little variation (δ57/54Fe = −0.05‰ to 0.03‰) with an average of 0.00 ± 0.06‰ (2SD, n =7), close to the suggested δ57/54Fe value of 0.04 ± 0.04‰ for the upper mantle, and there is no significant inter-mineral disequilibria. Compared with the Group 1 lherzolite, the Group 2 lherzolite experienced melt-rock interaction with significant enrichment of Fe as evidenced by relatively lower Mg# (84.9 to 88.2) in olivine and pyroxene grains and LREE-enriched REE patterns in clinopyroxene. Importantly, the Group 2 lherzolite exhibits a large range in Fe isotopic compositions, with δ57/54Fe ranging from −0.48‰ to 0.27‰, and disequilibrium Fe isotope fractionation is noted between most of coexisting Group 2 minerals (Δ57/54FeOpx–Ol = −0.16‰ to 0.25‰ and Δ57/54FeCpx–Ol = −0.16‰ to 0.30‰), reflecting kinetic fractionation during melt-rock interaction. Such processes play an important role in producing inter-mineral Fe isotopic disequilibrium and local Fe isotopic heterogeneity of the subcontinental mantle lithosphere beneath the Cathaysia block, South China, as noted for the subcontinental lithospheric mantle under the North China Craton.