Liquidambar formosana Hance, a tree species in subtropical broad-leaved forests, exhibits a striking autumn leaf coloration. However, how drought stress during this period influences leaf color change remains poorly understood. In this study, two-year-old seedlings were subjected to four drought gradients. Leaf color parameters, pigment contents, cellular structure, photosynthetic physiology, and hydraulic properties were systematically measured throughout the leaf color transition period. The results show that, with increasing drought severity, leaf red-green coordinate a* increased significantly during early-to-middle stress (S1–S3), while lightness L* and yellow-blue coordinate b* increased at late stress (S4). Chlorophyll (Chl) content continuously decreased, anthocyanins (Ant) peaked at mid-stress, and carotenoids (Car) became enriched at late stress. Leaf cellular structure and hydraulic parameters declined, photosynthetic function was inhibited, and antioxidant enzyme activities showed an initial increase followed by a decrease. Correlation analysis and Random Forest models revealed that L* was strongly associated with superoxide dismutase (SOD) activity, carotenoid-to-chlorophyll (Car/Chl) ratio, and net photosynthetic rate (P_n); a* was closely linked to osmotic potential at full saturation (Ψ_sat), relative water content at the turgor loss point (RWCtlp), SOD activity, Car/Chl ratio, anthocyanin-to-chlorophyll (Ant/Chl) ratio, Ant content, transpiration rate (T_r), P_n, and main vein thickness (Mvt), while b* was primarily correlated with Ψ_sat, Car/Chl ratio, SOD activity, Ant/Chl ratio, and P_n. These statistical associations suggest multiple physiological processes are involved in leaf color change. Based on these findings, we propose a hypothetical sequence: drought initially disrupts leaf water status, leading to structural atrophy and hydraulic decline, followed by photosynthetic inhibition, activated antioxidant defense, and altered pigment accumulation, which are correlated with the sequential leaf color transition from green to red to yellow-orange in this species.