Oil-source correlation studies have demonstrated that the crude oils in the Ordos Basin were mainly derived from organic-rich lacustrine mudstones of the Yanchang Formation. The sedimentology, petrology and organic geochemistry of these mudstones have been studied intensively, but their trace and rare earth element (REE) characteristics have received little attention. In this paper, we present trace and rare earth element data of the Upper Triassic Yanchang Formation mudstones in the southern Ordos Basin to constrain the palaeoenvironment, provenance and depositional setting. Our results show that the REE and trace element concentrations of the Yanchang Formation mudstones are higher than those of the upper continental crust (UCC). The Sr contents and Sr/Ba and Y/Ho ratios of these mudstones indicate the absence of a marine transgression during the sedimentation of the Upper Triassic mudstones. The depositional environment of the Upper Triassic mudstones was slightly oxic as evidenced by the values of Eu/Eu*, Ce/Ce*, Ceanom, δU, U/Th, V/Cr and Ni/Co. The UCC-normalized distribution pattern of REEs, spider diagrams, the ratios of related elements, the bivariate diagrams of Th/Sc–Zr/Sc and La/Th–Hf and the ternary plots of La–Th–Sc and Th–Sc–Zr/10 signify that the provenances of the Chang9–7 mudstones were mainly derived from a continental island arc, whereas the provenances of the Chang6–3 mudstones were mainly derived from a mixture of continental island arc and active continental margin, and the latter contain less recycled materials. Combined with the previous studies of detrital zircon dating and petrography of the Yanchang Formation sandstones in the southern Ordos basin, we propose that the Qinling orogenic belt served as one of the primary source regions occurring between the Chang7 and Chang6 periods, corresponding to the initial uplift of the west Qinling Mountains due to the collision between the Yangtze and North China blocks. Copyright © 2014 John Wiley & Sons, Ltd.