This study was undertaken to investigate mechanisms of mineral transformations associated with microbial reduction of structural Fe(III) in smectite. Shewanella oneidensis strain MR-1 cells were inoculated with lactate as the electron donor and Fe(III) in smectite as the electron acceptor. The extent of Fe(III) reduction was observed to reach up to 26%. Reduction proceeded via association of live bacterial cells with smectite. At the end of incubation, a large fraction of starting smectite was transformed to euhedral flakes of biogenic smectite with different morphology, structure, and composition. Lattice-fringe images obtained from environmental cell transmission electron microscope displayed a decrease of layer spacing from 1.5±0.1 nm for the unreduced smectite to 1.1±0.1 nm for the reduced smectite. The biogenic smectite contained more abundant interlayer cations, apparently as a result of charge compensation for the reduced oxidation state of Fe in the octahedral site. To capture the dynamics of smectite reduction, a separate experiment was designed. The experiment consisted of several systems, where various combinations of carbon source (lactate) and different concentrations of AQDS, an electron shuttle, were used. Selected area electron diffraction patterns of smectite showed progressive change from single-crystal patterns for the control experiment (oxidized, unaltered smectite), to diffuse ring patterns for the no-carbon experiment (oxidized, but altered smectite), to well-ordered single crystal pattern for the experiment amended with 1 mM AQDS (well crystalline, biogenic smectite). Large crystals of vivianite and fine-grained silica of biogenic origin were also detected in the bioreduced sample. These data collectively demonstrate that microbial reduction of Fe(III) in smectite was achieved via dissolution of smectite and formation of biogenic minerals. The microbially mediated mineral dissolution-precipitation mechanism has important implications for mineral reactions in natural environments, where the reaction rates may be substantially enhanced by the presence of bacteria.