Peridot is one of the few gemstones that occur in only one color, an olive green. The intensity and tint of the green, however, depends on how much iron is contained in the crystal structure, so the color of individual peridot gems can vary from yellow- to olive- to brownish-green. The most valued color is a dark olive-green.

Olivine, of which peridot is a type, is a common mineral in mafic and ultramafic rocks, and it is often found in lavas and in peridotite xenoliths of the mantle, which lavas carry to the surface; but gem quality peridot only occurs in a fraction of these settings. Peridot can be also found in meteorites.