A method is disclosed for extracting residual vegetable oil contained in spent bleaching clays used in refining and processing of such oil and for processing the extracted clay for reuse. The spent bleaching clay containing the residual vegetable oil is mixed with water, an organic binder and a plastic clay to form a composition of putty-like consistency which can be formed into particulate solids of suitable size for solvent extraction of the oil. The vegetable oil in the particulate solids is then extracted by solvent extraction with a suitable solvent. The remaining particulate solids with the oil removed may be retorted to produce an activated carbon/clay product useful to lighten the color of the oil being processed, as a filter aid, for water treatment purposes or for other uses where activated carbon is generally used.