Siltstones from the Precambrian Freda Formation in Wisconsin have been studied by scanning, scanning-transmission and analytical electron microscopy (SEM, STEM and AEM), and X-ray diffraction (XRD). XRD data for drill core samples show a change from smectite-rich Illite-Smectite (I-S) in shallow samples to illite in deeper samples, implying a transition during burial diagenesis. Transmission electron microscopy (TEM) observations of shallow samples reveal the presence of three clearly distinguishable kinds of dioctahedral clay minerals: (1) detrital grains of micrometer-sized, mature muscovite; (2) small packets in the matrix consisting of dominant (Reichweite) R1 I-S or (3) small packets of illite. The illite and I-S stacks occur separately and have similar textures, with packet thicknesses averaging approximately 400 Aa, within the range of anchizonal illite. Illite and detrital muscovite commonly display strain features typical of the effects of tectonic stress. Void space within I-S or illite packets is inferred to be a strain feature, and to have served as pathways for fluids. Detrital muscovite shows abundant alteration features including (001) boundaries which are continuous with parallel packets of I-S; individual layers commonly show along-layer transitions of muscovite to smectite or I-S. Trioctahedral clays consist primarily of detrital chlorite which commonly shows direct alteration to R1 I-S and smectite, as with detrital muscovite. Deep samples contain only unaltered, coarse detrital muscovite, and thin packets of illite forming stacks and comprising most of the matrix. The texture of the illite appears to be identical to that of shallow samples, with characteristics such as packet size typical of anchizonal illite. Trioctahedral clays consist almost entirely of detrital grains of chlorite and corrensite. They occur as separate grains with rather constant composition, without signs of alteration. The data imply that all of the studied rocks have been subjected to a uniform anchizonal grade of metamorphism in which detrital grains were largely unchanged but matrix clays were transformed to packets of illite. The unusually abrupt transition with depth from highly expandable I-S to illite is inferred to actually be the result of subsequent alteration of authigenic illite and detrital chlorite and muscovite to R1 I-S and smectite in shallow rocks. This late overprinting of the anchimetamorphic clay mineral assemblage is inferred to have been locally caused by fluids with temperatures less than those of peak metamorphism. This process, called "retrograde diagenesis", gave rise to a sequence of dioctahedral I-S and illite which mimics classic prograde sequences. Interpretations of such sequences as being prograde, especially in cases of ancient rocks, should be interpreted with caution when high-resolution images of textures are not available.