Pelagic sediment enriched in critical metals (e.g. rare earth elements and yttrium, REY) has attracted much attention in recent years. Extensive research has focused on identifying the specific host mineral of REY in bulk pelagic sediment, however, research on clay-sized fraction of REY-rich sediment has not been fully understood yet. In this study, we aimed to investigate the host phase and migration mechanism of REY in clay-sized fractions from two cores, GC23 and GC17, located on the western and eastern sides of the East Pacific Rise (EPR), respectively. To the best of our knowledge, this is the first comprehensive investigation of the clay-sized fraction of REY-rich sediment associated with hydrothermal activity. Results show that GC23 contains negligible clay minerals but well-crystallized Fe oxyhydroxides, while GC17 is rich in smectite and poor-crystallized Fe oxyhydroxides. REY are predominantly hosted in poorly crystallized Fe-Mn oxyhydroxides, with some phosphorus selectively scavenged by Fe oxyhydroxides from seawater. In addition, fluorapatite nanocrystals were first observed within the matrix of Fe oxyhydroxides using transmission electron microscopy (TEM), indicating the formation of fluorapatite. The post-Archean average shale (PAAS)-normalized REY patterns show similar seawater-like patterns in both the clay-sized and silt-sized fraction. The clay-sized fractions primarily derived from hydrothermal plumes plays an important role in scavenging REY from ambient seawater. This study represents a significant step towards understanding the formation of REY-rich sediment related to hydrothermal activity. A two-stage mineralization process is proposed for the formation of REY-rich sediment near the EPR fields. Firstly, REY are initially scavenged by hydrothermal Fe-Mn oxyhydroxide particles from seawater during their lateral dispersion with hydrothermal plumes under low sedimentation rate until they are buried by newly formed precipitates. With the process of early diagenesis, poor crystallized Fe oxyhydroxides will be experienced recrystallization. Subsequently, REY would be released into porewater with the process of recrystallization due to their tendency to remain in a poorly crystallized phase. Ultimately, they are captured by biogenic apatite and/or fluorapatite. The case study indicates that REY-rich sediments may primarily formed within the dispersion area of hydrothermal plumes. Simultaneously, the necessity of slow sedimentation rates, greater water depth, and deep currents all accountable for the formation of REY-rich layers.