The Palaeocene–Eocene Thermal Maximum (PETM) was a global extreme climatic event, but it is relatively unknown from lower latitudes or equatorial regions in comparison to mid- and high latitudes. The present study provides the first clay mineralogical evidence of the PETM and subsequent hyperthermal events in a near-equatorial region represented by the Akli Formation in the Barmer Basin, India. The 32 m-thick succession of the Akli Formation shows abrupt changes in smectite and kaolin abundances preceding, during and succeeding the PETM event. Within the studied section, the kaolin content increases from 5–8% pre-PETM to 30–35% during the PETM, and then again decreases to 5–6% during the post-PETM period. The smectite, however, is marked by a corresponding decrease and its transformation into kaolin in acid weathering conditions. The transformation of the smectite is first marked by hydroxy interlayering and then transformation into kaolin during the PETM. The transformation of smectite into kaolin also resulted in extensive precipitation of iron oxide in sediments. The clay mineralogical changes in the Palaeocene–Eocene transition sediments of the Akli Formation were caused by 3–5°C warming and a 25–50% increase in rainfall during the hyperthermal events. Unusually high charcoal (~20%) fragments during the Palaeocene–Eocene transition also suggest warming and widespread biomass burning during the PETM in the lower latitudes.