Abstract: Clay content is a critical factor influencing the engineering properties of red clay. However, the effects of clay particles on the strength, deformation, and permeability characteristics of red clay remain insufficiently understood. To investigate the influence of different clay contents on the mechanical properties of red clay and the evolution of its internal microstructure, red clay from Guilin, China, was selected as the study material. Using the principle of static water sedimentation, clay particles were extracted from the red clay to prepare samples with varying clay contents. Macroscopically, triaxial shear tests, compression tests, shrinkage tests, and variable-head permeability tests were conducted to analyze the effects of clay content on the strength, deformation, and permeability of red clay. Microscopically, scanning electron microscopy (SEM), nitrogen adsorption tests, and mercury intrusion porosimetry (MIP) were employed to examine the influence of clay particles on the microstructure of red clay. The results indicate that as the clay content increases, the cohesion of red clay significantly improves, effectively offsetting the reduction in the internal friction angle and thereby enhancing shear strength. The secant modulus and compression modulus increase, while the compression coefficient, linear shrinkage rate, volumetric shrinkage rate, and permeability coefficient decrease significantly. Clay particles reconstruct the pore structure through a coupled filling and cementation mechanism, resulting in a denser soil structure, increased strength, and improved resistance to deformation and seepage. This study not only contributes to refining the theoretical framework of the constitutive relationships of red clay, but also provides a scientific basis for engineering design, hazard mitigation, and foundation treatment in red clay regions.