The clay fraction of the Mahakam Delta Basin (eastern Kalimantan, Indonesia) consists of mixed-layer illite/smectite, kaolinite/dickite, detrital illite, and chlorite. Kaolinite formed early as vermicular particle aggregates, and thick dickite booklets formed late in pore spaces. The dickite particles probably grew in deeper intervals of the sequence, in contact with brines acidified by decarboxylation of organic matter, during dissolution of K-feldspar and upward migration of potassium. In the Handil field on the nearshore anticline, evolution of the mixed-layer illite/smectite is characterized by a decrease in expandability with depth. In the Tunu field, located on the next offshore anticline, variable amounts of expandable layers suggest a different evolution. The conversion process of smectite to illite layers in the mixed layers depends on the lithology of the host rocks, transformation in the shales, and dissolution-precipitation in the sandstones. Sample location also played a role in the conversion process because the types of illite clays in the two locations differ when they are compared at similar degrees of evolution. Present-day temperatures and paleotemperatures, vitrinite reflectance, and illitization of the mixed-layer illite/smectite all suggest that organic matter and clay particles evolved differently in the Handil field, but similarly in the Tunu field. Integration of the analytical results obtained here and comparison with a two-dimensional numerical model suggest that hydrocarbon generation took place in the deeper synclinal zones of the sequence, and that oil migrated upward with brines, probably inducing most of the illitization in the upper sequence. Both models emphasize the role of faults in channelizing fluid flow during the final stages of evolution of the basin.