Based on the test results deriving from laboratory simulation experiment device which consists of a waste layer, a drainage layer, a compacted clay layer, from the top down, as well as a contaminants recirculation system, and a few test instruments, falling head permeability test and scanning electron microscopy (SEM) are conducted to determine the permeability and microstructure of the contaminated clay at four pollution depths: 22.5, 45.0, 67.5 and 90.0 cm respectively. Consequently, quantitative relationship among such parameters as permeability coefficient k, total pore area A, area void ratio e, and mean pore size d(0) with pollution diffusion depths are explored. Finally, the evolution mechanism of the permeability and microstructure of contaminated clay related to life source is revealed. The researches show as follows: with the increase of pollution depth, permeability coefficient k, total pore area A, area void ratio e as well as mean pore size d0 are increasing, and their relationship can be summarized as k - 7 lnd(A) - 200e(2) + 160e + 2d(0)(2) - 12d(0) - 8; Under such effects as ions exchange and adsorption, organic materials and suspended solids coagulation as well as complex chemical reactions between contaminants and clay, with pollution depth increasing, the clay permeability is improved due to the decreased influence of contaminants and their degradation products on clay, as well as the increased total pore area and void ratio.