Causal Concept Graphs in LLM Latent Space for Stepwise Reasoning

Retrieval augmented generation (RAG) has enhanced large language models by enabling access to external knowledge, with graph-based RAG emerging as a powerful paradigm for structured retrieval and reasoning. However, existing graph-based methods often over-rely on entity-centric node matching and lack explicit causal modeling, leading to unfaithful or spurious answers. Prior attempts to incorporate causality are typically limited to local or single-document contexts and also suffer from information isolation that arises from modular graph structures, which hinders scalability and cross-module causal reasoning. To address these challenges, we propose CausalRAG2, a framework that rethinks knowledge organization for graph-based RAG through causal gating across hierarchical modules. CausalRAG2 explicitly models causal relationships to suppress spurious correlations while enabling scalable reasoning over large-scale knowledge graphs. We also introduce HolisQA, a benchmark for holistic comprehension beyond entity-centric matching. Extensive experiments demonstrate that CausalRAG2 consistently outperforms competitive graph-based RAG baselines across multiple datasets and evaluation metrics. Our work establishes a principled foundation for structured, scalable, and causally grounded RAG systems. Our code and HolisQA benchmark are available at https://github.com/Pwnb/CausalRAG2.

Causal graphs provide a high-level language for making mechanisms transparent. Recent work uses Large Language Models (LLMs) to recover causal graphs of external-world processes. Instead, in this paper, we use causal graphs to model LLM inference itself, providing stakeholders with a transparent view of how the model perceives and organizes high-level concepts to produce a prediction. We propose a four-phase method for constructing such graphs. Given a target LLM and a set of textual examples, our method discovers class-discriminative, human-interpretable concepts and maps each input to LLM-perceived concept states. We then introduce an MCMC-inspired counterfactual augmentation procedure that expands the sparse observational data through chains of counterfactuals. This enables stable causal discovery with $σ$-CG, yielding informative, interpretable graphs. We apply our method to three LLMs across disease diagnosis, sentiment analysis, and LLM-as-a-judge classification tasks. We evaluate the learned graphs for predictive fidelity and structural stability, and the MCMC-inspired augmentation for convergence and downstream utility. Our results show that the discovered causal graphs capture meaningful dependencies consistent with LLMs' reasoning. Together, this paper provides a foundation for concept-level explainability of LLMs.

Large language models have shown strong performance in natural language generation and downstream reasoning tasks, but they still struggle with logical consistency, factual grounding, and interpretability in complex multi-step reasoning. To address these limitations, this paper proposes SGR, a stepwise reasoning enhancement framework that integrates large language models with external knowledge graphs through query-relevant subgraph generation. Given an input question, SGR first extracts key entities, relations, and constraints to construct a structured schema, then retrieves compact subgraphs from a knowledge graph using schema-guided querying. The generated subgraphs provide explicit relational evidence that guides the language model through step-by-step reasoning. In addition, SGR combines direct Cypher-based reasoning with collaborative reasoning integration, allowing candidate answers from multiple reasoning paths to be validated and aggregated according to both model confidence and graph consistency. Experiments on benchmark datasets including CWQ, WebQSP, GrailQA, and KQA Pro demonstrate that SGR improves reasoning accuracy and Hits@1 performance over standard prompting and several knowledge-enhanced baselines. Ablation studies further show that schema guidance and Neo4j-based retrieval are both crucial to the effectiveness of the framework. These results indicate that dynamically generated external subgraphs can improve the accuracy, robustness, and interpretability of LLM-based reasoning.