The occurrence and genesis of grain-coating chlorite were investigated in order to evaluate the impact of grain-coating chlorite on preserving porosity in the deep-buried Triassic Karamay volcaniclastic sandstones based on thin sections, scanning electron microscopy, and an electron probe. Grain-coating chlorite was formed during the eogenesis, originating from the precursor of smectite through the solid-state transformation (SST) mechanism. The hydration and dissolution of unstable, intermediately basic volcanic rock fragments provided essential Fe2+ and Mg2+ ions for the formation of grain-coating chlorite. Due to relatively high stability and low susceptibility to dissolution, acidic volcanic rock fragments could not promote chlorite formation but resulted in authigenic quartz and clays as pore-filling cements. This process would destroy reservoir properties. Under high hydraulic conditions, medium- to coarse-grained sandstone experienced saltation transport, creating significant velocity differentials and pressure differentials on grain surfaces. Subsequently, clay grains adhere to the surfaces, forming grain-coating chlorite during diagenesis with good continuity. In contrast, pebbly sandstone undergoes rolling transport, resulting in smaller velocity differentials on grain surfaces. This makes relatively ineffective clay adsorption and leads to discontinuous grain-coating chlorite in subsequent stages. Under weak hydraulic conditions, grains and clay particles in fine-grained sandstone undergo suspended transport, lacking mutual movement and velocity differentials. Clay particles cannot effectively cover particles but instead fill the pores between them. Therefore, continuous grain-coating chlorite is more commonly developed in the medium- to coarse-grained sandstones and is crucial for inhibiting quartz cementation with a coverage rate exceeding 80%. Inadequate coatings fail to inhibit quartz cementation effectively, while excessive coatings may block pore throats. Optimal protection of primary porosity could occur only when grain-coating chlorite is moderately developed.