The Linkuo terrace, situated to the west of the Taipei Basin in NW Taiwan, has thick red soils that have been little studied. This paper aims to interpret the development of these soils through chemical and micromorphological investigations, and relate the soils to their palaeo-environments. The soil samples were air dried, crushed and passed through a 2 mm sieve, and then subjected to conventional soil chemical and physical analyses, together with clay mineralogical and morphological characterization. Pedons I and II were clay with low base saturation (BS), cation-exchange capacity (CEC), and exchangeable cations. The pH of pedons I and II ranged from 3.80 to 5.26. The low magnetic susceptibility of these soils indicates that no magnetite (Fe3O4) or maghemite (γ-Fe2O3) are present. X-ray diffraction patterns of the magnetic clay fraction showed lepidocrocite, goethite and hematite, the amounts of which may relate to water fluctuation in the soil environments. Illite, kaolinite and quartz are major clay minerals in the red soil clay fractions. The micromorphology of all horizons showed a great accumulation of Fe-oxides. The upper horizon showed darkened isotropic Fe-oxide materials, and lower horizon showed a black to reddish dense plasma with soil matrix. The groundmass of the oxic horizon is generally characterized by a homogeneous distribution of the different coarse and fine constituents. The thick (4 m depth) and homogeneous red soils of the Linkuo terrace were developed from fine sediments after the gradual subsidence of the Taipei Basin. A large amount of gravel was flushed from the Xindian River before the Taipei Basin subsided. The Linkuo red soils can be classified as mesic, Typic Kandiudox. From the chemical compositions of clay fractions and the red soil features, these red soils can be considered as lateritic red earths or red earths that do not reach the criteria for laterite.