AbstractApatite is present as an accessory phase in many meteorites and is often formed as a secondary product of aqueous alteration. Its propensity to incorporate rare earth elements (REE) results in apatite usually being the main REE‐bearing phase in hydrously altered meteorites. Asteroid Ryugu is thought to have experienced pervasive aqueous alteration and material collected from the surface of Ryugu is expected to provide insight into asteroidal aqueous alteration processes without influence by terrestrial weathering. Morphologies and mineral associations of apatite grains from five rock fragments collected from the asteroid Ryugu by the Hayabusa2 spacecraft were examined and their REE concentrations were measured by synchrotron X‐ray fluorescence (SXRF) spectroscopy. The main minerals associated with apatite are dolomite, magnetite, and pyrrhotite. Grain boundary corrosion of the interfaces between apatite assemblages and the surrounding matrix suggest that paragenetic formation on the asteroid was followed by a later episode of hydrous alteration. Light REE (LREE) concentration levels recorded at 20–150 times those of bulk CI levels together with a steady increase from LREE toward enrichment of medium REE (MREE, up to Er) at 50–400 times bulk CI levels may suggest postgenetic removal of LREE from Ryugu apatite grains by late‐stage circulation of a hydrothermal fluid.