Authigenic grain-coating chlorite is widely distributed in the clastic rocks of many sedimentary basins around the world. These iron minerals were mainly derived from flocculent precipitates formed when rivers flow into the ocean, especially in deltaic environments with high hydrodynamic conditions. At the same time, sandstone sequences with grain-coating chlorites also tend to have relatively high glauconite and pyrite content. EPMA composition analysis shows that glauconites with “high Al and low Fe” content indicate slightly to semi-saline marine environments with weak alkaline and weakly reducing conditions. By analyzing the chlorite-containing sandstone bodies of the southern Sichuan Xujiahe Formation, this study found that chlorite was mainly distributed in sedimentary microfacies, including underwater distributary channels, distributary channels, shallow lake sandstone dams, and mouth bars. Chlorite had a tendency to form in the upper parts of sandstone bodies with signs of increased base level, representing the influence of marine (lacustrine) transgression. This is believed to be influenced by megamonsoons in the Middle and Upper Yangtze Region during the Late Triassic Epoch. During periods of abundant precipitation, river discharges increased and more Fe particulates flowed into the ocean (lake). In the meantime, increases or decreases in lake level were only affected by precipitation for short periods of time. The sedimentary environment shifted from weakly oxidizing to weak alkaline, weakly reducing conditions as sea level increased, and Fe-rich minerals as authigenic chlorite and glauconite began to form and deposit.