This research delves into the intricate nexus of particle size, mineralogical composition, surface attributes, elemental mapping, and rare earth element (REE) adsorption mechanisms within an ion-adsorption clay sample from South America. The investigation entails the fractionation of the ion-adsorption clay into three size categories: S1 (< 0.25 mm), S2 (0.25–0.5 mm), and S3 (0.5–2 mm). Each fraction undergoes meticulous characterization to unveil its elemental composition, mineralogical composition, surface area, morphological characteristics, elemental mapping, and the mechanisms governing REE incorporation. The results indicate that S1 has 31% physiosorbed, 8% chemisorbed, and 61% mineralized REEs, while S2 has 40% physiosorbed, 5% chemisorbed, and 55% mineralized REEs, and S3 has 24% physiosorbed, 5% chemisorbed, and 71% mineralized REEs. The physisorbed REEs are attributed to the presence of kaolinite, conducive to mostly physisorption. In terms of grain size and REE content/type relationship, the results show that REE content decreases with increasing grain size; however, there is not a clear trend in terms of REE occurrence modes with grain size. Heavy rare earth elements (HREEs) are discernibly favored in adsorption over light rare earth elements (LREEs). This preference is underpinned by the weathering processes that led to the formation of ion-adsorption clay, which facilitated the transport and accumulation of HREEs. Notably, the ion-adsorption clay encompasses a substantial content of mineralized REEs, necessitating more demanding extraction methodologies, such as acid baking followed by water leaching if complete extraction of all REEs is desired. Among the desorbable REEs, physisorption dominates, encompassing over 80% of the total. Chemisorbed REEs exhibit versatility in association with various minerals, encompassing kaolinite, quartz, and goethite. In essence, this study unveils the intricate interplay between particle dimensions, mineralogical constitution, surface attributes, and REE adsorption modes within this ion-adsorption clay sample. The ion-adsorption clay in this study contains a significant portion of mineralized REEs that cannot be extracted using the mild conditions typically employed for the desorption process. Additionally, the REE concentration in this ion-adsorption clay is notably higher than the average found in clay deposits worldwide, reaching levels comparable to those of regolith deposits in China, which are a major global source of REEs. This remarkable concentration of REEs, along with the unique modes of their occurrence in this deposit, presents a significant interest to the scientific community.