Gadolinium is a silvery-white metal when oxidation is removed. It is only slightly malleable and is a ductile rare-earth element. Gadolinium reacts with atmospheric oxygen or moisture slowly to form a black coating. Gadolinium below its Curie point of 20 °C (68 °F) is ferromagnetic, with an attraction to a magnetic field higher than that of nickel. Above this temperature it is the most paramagnetic element. It is found in nature only in an oxidized form. When separated, it usually has impurities of the other rare-earths because of their similar chemical properties.

Gadolinium possesses unusual metallurgical properties, to the extent that as little as 1% of gadolinium can significantly improve the workability and resistance to oxidation at high temperatures of iron, chromium, and related metals. Gadolinium as a metal or a salt absorbs neutrons and is, therefore, used sometimes for shielding in neutron radiography and in nuclear reactors.

Like most of the rare earths, gadolinium forms trivalent ions with fluorescent properties, and salts of gadolinium(III) are used as phosphors in various applications.

The kinds of gadolinium(III) ions occurring in water-soluble salts are toxic to mammals. However, chelated gadolinium(III) compounds are far less toxic because they carry gadolinium(III) through the kidneys and out of the body before the free ion can be released into the tissues. Because of its paramagnetic properties, solutions of chelated organic gadolinium complexes are used as intravenously administered gadolinium-based MRI contrast agents in medical magnetic resonance imaging.