Abstract Loess is found to blanket various landforms of different altitudes in the eastern coastal areas of the Bohai Sea, from Liaodong Peninsula to the Miaodao Islands and Jiaodong Peninsula in eastern China. Two major lithological units have been recognized: the Penglai Loess and the Dalian Loess. Recent studies reveal a weathered unit within the Dalian Loess and confirm the occurrence of Holocene loess. Random distribution of marine microfossils and concomitant occurrence of contrasting species in the loess rule out the possibility of the coastal loess being a marine sediment. The coastal loess is coarser and contains a higher content of unstable minerals compared to the inland equivalents. Regional variations in texture and heavy mineral assemblage within the coastal loess zone are also observed, suggesting that the primary source of the coastal loess is not northwestern China but is more likely to be from the coastal areas and the adjacent Bohai Sea basin. When the coastline was displaced a few hundred kilometres eastwards during the last glacial period, vast areas of the continental shelf of the Bohai Sea were exposed. Coastal dunefields may have been expanded and perhaps developed locally into a desert shelf environment. With intensified aeolian process, fine particles in the ancient fluvial and marine sediments were transported by small-scale low-level northwesterly and northerly winds and deposited along the eastern coasts of the Bohai Sea. The basal age of the Late Pleistocene Dalian Loess was previously estimated to be 11–25 ka, but preliminary thermoluminescence dating results suggest that it started to accumulate at least 30 ka earlier.