ABSTRACT: Osmanthus fragrans 'Yinbi Shuanghui' not only has a beautiful shape and fresh floral fragrance, but also rich leaf colors that change, making the tree useful for landscaping. In order to study the mechanisms of color formation in O. fragrans 'Yinbi Shuanghui' leaves, we analyzed the colored and green leaves at different developmental stages in terms of leaf pigment content, cell structure, and transcriptome data. We found that the chlorophyll content in the colored leaves was lower than that of green leaves throughout development. By analyzing the structure of chloroplasts, the colored leaves demonstrated more stromal lamellae and low numbers of granum thylakoid. However, there was a large number of plastoglobuli. Using transcriptome sequencing, we demonstrated that the expression of differentially expressed genes (DEGs) involved in chlorophyll degradation was upregulated, i.e., heme oxygennase-1 (HO1), pheophorbide a oxidase (PAO), and chlorophyllase-2 (CLH2), affecting the synthesis of chlorophyll in colored leaves. The stay-green gene (SGR) was upregulated in colored leaves. Genes involved in carotenoid synthesis, i.e., phytoene synthase 1 (PSY1) and 1-Deoxyxylulose-5-phosphate synthase (DXS), were downregulated in colored leaves, impeding the synthesis of carotenoids. In the later stage of leaf development, the downregulated expression of Golden2-Like (GLK) inhibited chloroplast development in colored leaves. Using weighted gene co-expression network analysis (WGCNA) to investigate the correlation between physiological indicators and DEGs, we chose the modules with the highest degree of relevance to chlorophyll degradation and carotenoid metabolism. A total of five genes (HSFA2, NFYC9, TCP20, WRKY3, and WRKY4) were identified as hub genes. These analyses provide new insights into color formation mechanisms in O. fragrans 'Yinbi Shuanghui' leaves at the transcriptional level.