We conducted rock magnetic, mineralogical, sedimentological and geochemical analyses on a sediment core (MD161/Stn-11) retrieved from a complex marine sedimentary system of Krishna-Godavari (K-G) basin to delineate the control of mass transport deposits (MTD’s) and methane-induced diagenesis on the sediment magnetic record. Four sediment magnetic zones (Z-I, Z-II, Z-III, Z-IV) were defined based on rock magnetic signatures. The sediment magnetic signal is mainly carried by complex magnetic mineral assemblages of detrital (titanomagnetite, titanohematite) and diagenetic (pyrite) minerals. Changes in rock magnetic properties are mainly controlled by fluctuations in supply of detrital magnetic particles, onset of MTD’s and differential rate of methane-influenced magnetic minerals diagenesis in the studied sediment core. Downcore reduction in magnetic susceptibility followed by subsequent precipitation of iron sulfides within sediment magnetic zone (Z-I) representing the period of normal sedimentation can be attributed to diagenetic dissolution caused by anaerobic oxidation of methane coupled to sulfate reduction. Decline in magnetic susceptibility and increase in sediment grain size within MTD-rich sediment intervals (Z-II, Z-III, Z-IV) is linked to loss of finer magnetic grains due to diagenetic dissolution and dilution caused by increase in concentration of diamagnetic minerals. Lower values of magnetic grain size diagnostic (ARM/IRM) parameter indicate loss of finer and selective retention of coarser magnetic particles due to diagenetic dissolution beyond 12 mbsf. Elevated content of total organic carbon (TOC) content in Z-III and Z-IV can be attributed to the efficient preservation of labile organic matter due to rapid sediment deposition. A conceptual model is presented to explain the control of mass transport deposit and magnetic mineral diagenesis on the sediment magnetic record.