This study investigated the occurrence and distribution of rare earth elements (REEs), including 14 lanthanoids, scandium (Sc), and yttrium (Y), in groundwater around a large coal-fired thermal power plant (TPP). The ICP-MS technique was used to analyze 16 REEs in groundwater samples collected from monitoring wells. REE concentrations ranged from 59.9 to 758 ng/L, with an average of 290 ng/L. The most abundant was Sc, followed by La, accounting for 54.2% and 21.4% of the total REE concentration, respectively. Geospatial analysis revealed the REE enrichment at several hotspots near the TPP. The highest REE concentrations were observed near the TPP and ash landfill, decreasing with the distance from the plant and the landfill. REE fractionation ratios and anomalies suggested the Light REE dominance, comprising over 78% of the total REEs. Correlation and principal component analyses indicated similar behavior and sources for most REEs. Health risk assessment found hazard indices (HI) of 1.36 × 10−3 and 1.98 × 10−3 for adults and children, respectively, which are far below the permissible limit (HI = 1). Likewise, incremental lifetime cancer risks (ILCR) were all below 1 × 10−6. Nevertheless, ongoing ash disposal and potential accumulation in the environment could elevate the REE exposure over time.