The mobility of rare-earth elements (REE) in low-grade diagenetic regimes, potentially leading to their clay-mediated fractionation, remains poorly understood. This study draws evidence from the argillitized Miocene tuff of the Southwestern Pannonian Basin (SPB) and adjacent Dinarides intramontane basins (DIB) to investigate the role of illite-smectite (I-S) in controlling early diagenetic REE behavior. The present research relies on detailed mineralogical, geochemical, and gas adsorption characterization of altered tuff, focusing on comparative analyses of the REE chemistry obtained by in situ laser ablation inductively coupled plasma mass spectrometry of glass shards and that of spatially related authigenic clay minerals. The depositional environment, in which the volcanic glass alteration took place, gave rise to the composition of secondary paragenesis, revealing a dominance of I-S. The normalized REE geochemistry of clay separates show similarities to unaltered glass, but notable differences indicate fluctuations in fluid/rock ratio environments. The redox conditions during glass alteration are reflected in Ce and Eu anomalies and indicate the ranges from oxic to anoxic across the analyzed tuffs. The results showed that I-S, formed through volcanic glass diagenesis, inherits magmatic REE signatures but also fractionates REE based on more reducing physiochemical conditions. The strong correlation between smectite content of I-S and a total budget of fractionated REE posits the smectite interlayers as prime factors controlling the REE fractionation during volcanic ash diagenesis. Furthermore, greater specific surface area values and development of slit-shaped porosity along the non-basal edges of I-S particles contributed to REE adsorption. These findings contribute to our understanding of REE behavior in low-temperature diagenetic environments, emphasizing the significance of clay minerals in retaining and fractionating these elements which may lead ultimately to the formation of economically viable ion-adsorption clay deposits.