Abstract: Nanhong agate is widely welcomed in China because of its bright red colour. The pursuit of the red agate is the inheritance of Chinese red agate culture, which can be dated back to more than 3 000 years ago. Field survey showed Nanhong agate geographically distributed in Yunnan and Sichuan provinces, the Southwestern of China (Fig. 1). Geologically, Nanhong agate can be either produced as fillers in cracks and pores of the Late Permian E'meishan basalts, or as pebbles in the Early Triassic conglomerates and mudstones. Petrographic analyses reveal the formation of agates could be linked to the alteration of basalts by the silicon releasing in the process of transformation from pyroxene to chlorite. The formation of Nanhong agates could have experienced multi-stage alterations and crystallizations, which are supported by the occurrence of multi-stage chlorites and different homogenization temperatures of fluid inclusions bearing in the coarse grained quartz. The Nanhong agates are characterized by diffusely distributed hematite and/or goethite, causing the red to reddish orange in colour. These iron oxides occurre as aggregates showing dominantly spherical shapes and minor visible ellipsoid, hemisphere, radial and veil shape, with a size generally between 1.20 μm and 43.21 μm. Raman spectra, scanning electron microscopy, and high resolution transmission electron microscopy confirmed the present of hematite with single hematite particles smaller than 100 nm. Wide market survey of the selling Nanhong agates presented the quantified colour parameters, including hue, saturation, and brightness, obeying normal distribution in the Hue-Saturation-Brightness (HSB) colour space. After standardization, the hue (H) of Nanhong agate is mainly distributed in a range between 3.20°, 17.52° at a 95 % confidence level. The saturation (S) and brightness (B) are mainly within 63.82 %, 92.69 % and 42.97 %, 75.37 %, respectively. The Nanhong agates could be statistically classified as different grades by the Two Step Cluster analysis, which is objective compared to subjective visual evaluation. Factors causing the colour difference of Nanhong agates are attributed to the colour properties and distribution characteristics of hematite and goethite. The hue of Nanhong agate is dependent on the colour of the impurity minerals, hematite or goethite. Saturation is affected by the area ratio of impurity minerals. As the area ratio of impurity minerals is both affected by the distribution density and the average particle size, the saturation of Nanhong agate is the largest when the average particle size is near 10 μm. No obvious correlation is observed between the brightness of Nanhong agates and their related properties and characteristics.