A series of α-Fe2O3/palygorskite (α-Fe2O3/Pal) inorganic-inorganic composite pigments were prepared by a one-step hydrothermal process using six kinds of iron-rich natural palygorskite clays (Pal-c) with different structures, morphologies and compositions as starting materials. The effects of different natural Pal-c on the structure, chemical composition, color and stability of the as-prepared composite pigments were studied comparatively by Fourier transform infrared spectroscopy (FTIR), X-ray diffraction (XRD), scanning electron microscope (SEM), transmittance electron microscope (TEM), X-ray fluorescence spectroscopy (XRF) and CIE-L*a*b* colorimetric analyses. The results showed that the Fe(III) ions in the reaction solution can be converted into red α-Fe2O3 particles in situ on the Pal surface, without adding any chemical precipitant. Pal not only induce formation of α-Fe2O3 as a ‘green’ precipitant, but also effectively control the particle size of α-Fe2O3 nanoparticles as a microreactor and prevent the aggregation of particles as a supporter. The chemical composition of natural Pal-c has a great influence on the L*, a*, b* values of the composite pigments, while the associated mineral types have little effect on the color values of the pigments. The optimal iron-red composite pigment mainly composed of 58.59% Fe2O3 and 35.11% SiO2 exhibits the best L* value of 31.1 and a* value of 33.4, which is superior to commercial iron red pigment (a* = 26.9). The red composite pigment exhibits excellent chemical stability and remains in a good red color after treatment with an acid solution, an alkaline solution, or an organic solvent. In addition, the red composite pigment can be well dispersed in ethanol or water, and can be uniformly sprayed onto the ceramic substrate and stably coated on it, and remains a vivid red color after calcinations at 1100 °C.