Labuan Island is located in the western part of Borneo Island about 8 km from the state of Sabah, Malaysia. It covered the area of 97 km2 with highest peak recorded at 85 m above sea level. The island is constituted of five lithological units; Crocker Formation, Temburong Formation, Setap Shale, Belait Formation and Quaternary Alluvium. In view of the limited amount of reported work on sediments in Labuan Island especially in coastal areas, this study aim to discover the physical (pH value, moisture content, organic matter, specific gravity, grains size) and geochemical (elemental) characteristic of sediments and the distribution of REEs in Labuan Island. The samplings of sediments were conducted by using rotary wash machine in the form of core (Shelby tube) by STL Geotechnical Engineering. Sediments were taken at 7.6 m depth below the ground. A total of 21 samples were collected at five different locations; four locations from coastal area; Tanjung Kerupang (BH1), Sungai Lada (BH2), Tanjung Kiansam (BH3), Tanjung Batu (BH5) and a sampling location at mangrove swamp; Sungai Kinabenua (BH4). The lowest pH value (acidic) was recorded in sample taken from BH4 (5.41) while the highest pH value (alkaline) was recorded in sample from BH2 (9.32). It was found that sediments from BH4 showed the highest moisture content and organic matter content compared to the other samples. Grain size analysis showed that the mean sediments sizes ranged from medium to coarser sand. For soil type analysis, few samples from BH4 were identified as loamy sand while the rest of the samples (BH1, BH2, BH3 and BH5) were sand. The sorting value ranged from poorly sorted to very well sorted for all samples. For specific gravity analysis, most samples from BH4 showed reading < 2.6 compared to other samples. Inductive Coupled Plasma-Mass Spectrometry (ICP-MS) was used in determination of REEs concentration in three samples from each borehole. The results showed that concentrations of REE were found gradually increase in depth. Samples in BH3 and BH5 were abundance in REEs as the following decreasing order Y>Nd>Gd>Dy>Sm. It was concluded that all parameters had significant difference in contribution to the present of REE at the Labuan Island based on value of R2 = 0.920, as shown by Multiple Linear Regression using SPSS software.