Laterite deposit at Sheikh-Marut (NW Mahabad, West-Azarbaidjan province, Iran) occurred within middle–upper Permian carbonate rocks. It consists of seven stratiform and/or discontinuous lenticular layers extending over 4.2 km in length and having thicknesses ranging from 3 to 14 m. Mineralogical data show that the ores contain kaolinite and hematite as major and boehmite, diaspore, halloysite, amesite, anatase, and muscovite-illite as minor mineral phases. The computed Ce anomaly values in the ores range from 0.05 to 20.84. Conservative index (e.g., Eu/Eu*) suggests that this deposit is a product of alteration and weathering of basaltic rocks. Rhythmic increment of ΣREE values of the ores with approaching to the carbonate bedrocks shows an in-situ occurrence of lateritization processes. Mass change calculations of elements indicate that two competing processes namely leaching and fixation were the major regulating factors in concentration variation of REEs (La–Lu) in this deposit. The obtained results show that pH increase of weathering solutions by carbonate bedrocks, existence of organic matters, and the degree of comlexation with organic ligands played remarkable role in distribution of REEs during lateritization. Further geochemical considerations revealed that secondary phosphates, Mn-oxides and -hydroxides, diaspore, and anatase were the potential hosts for REEs in this deposit.