Leaf color mutants serve as excellent models for investigating the metabolic pathways involved in chlorophyll biosynthesis, chloroplast development, and photosynthesis in plants. This study aimed to elucidate the mechanisms underlying color formation in the yellow–green leaf mutant (YL) of Magnolia sinostellata by employing physiological, cytological and transcriptomic analyses to compare the mutant with control plants (wild type Magnolia sinostellata, WT). Physiological assessments revealed a reduction in chlorophyll content, particularly chlorophyll b, alongside an increase in the flavonoid level in YL relative to WT. Cytological examinations indicated the presence of defective chloroplasts within the mesophyll cells of the mutants. Transcriptomic analysis identified 8205 differentially expressed genes, with 4159 upregulated and 4046 downregulated. Genes associated with chlorophyll metabolism, flavonoid metabolism, photosynthesis, and signaling pathways were found to play crucial roles in leaf yellowing. In conclusion, this study delineated the phenotypic, physiological, cytological, and transcriptomic differences between YL and WT leaves, offering novel insights into the mechanisms driving leaf yellowing in Magnolia sinostellata.