The rare earth elements (REEs) provide significant geological information and serve as a reliable indicator for predicting the paleoclimate, paleoenvironment, and paleotectonic evolution of sedimentary rocks. The REEs, major elements, and trace elements of 75 marine shale samples collected from the Late Permian Dalong Formation at the Fantiansi (FTS) and Putaoling (PTL) sections in the Lower Yangtze region were analyzed. The results revealed that the major elements Al2O3, K2O, and TiO2 were primarily influenced by clay minerals associated with terrigenous detrital, whereas SiO2 and Na2O were not affected by clay minerals. The ΣREE values obtained from the Late Permian Dalong Formation at the Fantiansi (FTS) and Putaoling (PTL) sections in the Lower Yangtze region were found to be lower than those of the Post-Archean Average Shale (PAAS) (184.8 μg/g). The study of REE indicators related to the source, redox conditions, and tectonic settings led to the following conclusions: (a) ΣREE showed strong positive correlations with TiO2, Al2O3, K2O, and Na2O, but exhibited relatively weak correlations with Fe2O3 and P2O5, suggesting that REEs were mainly associated with clay minerals, but were also influenced by pyrite, phosphates, and other minerals; (b) The high values of Ce/Ce*, MoEF, UEF, and Corg/P were mainly concentrated in Stages I, II, III and V of the Dalong Formation at the FTS and PTL sections, and the corresponding strong anoxic environment was more conducive to the preservation of organic matter; (c) The diagram between La/Yb and ΣREE, Al2O3-TiO2, TiO2-Zr, and La/Th-Hf bivariate diagrams indicated that the provenance of the rocks from the Dalong formations was primarily felsic igneous rocks; (d) Discriminant-function diagrams and La-Th-Sc, Th-Sc-Zr/10 and Th-Co-Zr/10 triangular diagrams show that the clastic sediments of the Dalong formations were derived most likely from continental island arcs. This study corresponds to the background of the transition from continental margin to continental collision structure in South China during the Late Permian.