Variations in the magnetic susceptibility of the Chinese loess and its interbedded paleosols correlate strikingly well with the deep-sea oxygen isotope record. Low susceptibility values are found for the loess layers, and high values are found for the soil horizons. Two interpretative models have been advanced to account for these magnetic variations. Both of these models discount any significant in situ formation of magnetite during soil-forming periods. Instead, they infer relative concentration of detrital or atmospheric magnetite at these times. We critically examine the assumptions made in these models and, on the basis of some new mineral magnetic data and formalized magnetic flux calculations, offer an alternative explanation of the loess magnetic record. Our model identifies pedogenic formation of magnetite as the major contributor to the high magnetic susceptibility of the paleosols. The formation and preservation of this pedogenic magnetite is dependent on soil-forming conditions and hence reflects the regional climate.