Avian pathogenic Escherichia coli (APEC) is a major bacterial infection that causes economic losses in the global poultry industry. Palygorskite (PAL) has been shown to enhance growth performance while improving antioxidative and anti-inflammatory properties of broilers. This study evaluated the protective effects of PAL on growth performance and liver function in broilers subjected to APEC challenge. A total of 320 one-day-old male Arbor Acres chicks were divided into four groups with eight replicates of ten birds each, based on a 2×2 factorial arrangement (basal diet or 5g/kg PAL-supplemented diet) and inoculation (bacterial culture medium or APEC). PAL increased body weight gain (BWG) prior to APEC challenge (P < 0.05). However, APEC caused losses in BWG, feed intake (FI), and feed efficiency, along with increased relative hepatic weight, hepatic pathology scores, and hepatic-cell apoptosis rate (P < 0.05). Compared to normal birds, APEC increased interleukin (IL)-1β, interferon-γ (IFN-γ), tumor necrosis factor-α (TNF-α), malondialdehyde (MDA), and nitric oxide (NO) levels, as well as lysozyme (LZM) and myeloperoxidase (MPO) activities, while decreasing total antioxidant capacity (T-AOC) and IL-10 levels, and total superoxide dismutase (T-SOD) and catalase (CAT) activities in both serum and liver, APEC also raised alanine aminotransferase (ALT) and aspartate aminotransferase (AST) activities, but reduced total protein (TP), albumin (ALB), immunoglobulin (Ig) A, IgG, and IgM levels in serum (P < 0.05). Moreover, APEC increased hepatic mRNA level of IL-1β, IFN-γ, TNF-α, nuclear factor kappa B, and inducible nitric oxide synthase (iNOS), while inhibited mRNA level of IL-10 (P < 0.05). In contrast, PAL increased BWG and FI, alleviated hepatic-cell apoptosis rate during the challenge period (P < 0.05). An incorporation of PAL reduced triglyceride and NO contents, ALT and AST activities, while increasing TP, ALB, IL-10, IgG, and IgM levels in serum, enhancing serum T-SOD and CAT activities, elevating hepatic T-AOC and CAT activities, inhibiting hepatic MDA accumulation, and reducing IL-1β levels and LZM activity in both liver and serum (P < 0.05). An interactive effect was found for hepatic TNF-α and iNOS mRNA expression, in which PAL inhibited their mRNA expression in APEC-challenged birds (P < 0.05). Overall, PAL addition partially mitigated the negative impact of APEC challenge on growth performance and liver function of broiler chicks at an early age.