The mechanism for the kaolinization of smectite is extremely complex. The purpose of this study was to explore this mechanism by providing more microscopic information about kaolinite-smectite (K-S) intermediate phases. Crystal-chemical changes were investigated and integrated in a model of the transformation mechanism. Eight K-S samples from three localities, derived from volcanic ash beds, were studied using transmission and analytical electron microscopy (TEM, AEM) and high-resolution TEM (HRTEM). The study completes a previous investigation, using several analytical techniques. The samples cover the range of K-S composition available from the previously studied sample set. Analysis by TEM indicated the preservation of particle morphology throughout the process. Most K-S particles had anhedral, smectite-like morphology, and only the most kaolinitic specimen revealed the coexistence of anhedral and euhedral, hexagonal particles. Analytical electron microscopy showed large chemical variations within samples, corresponding to various degrees of smectite kaolinization. Comparison of chemical results (Si/Al) and d060 values (proxy for octahedral composition) with the extent of kaolinization from thermogravimetry (TG) indicates that chemical changes in the octahedral sheet occur mainly when the proportion of kaolinite is 40–70%. The results above are consistent with kaolinization occurring via layer-by-layer transformation through the progressive loss of individual tetrahedral sheets in smectite layers and subsequent chemical changes in the octahedral sheet. Such a mechanism would produce the results observed in this study: (1) most particles preserve their original morphology; (2) significant variation in terms of the extent of transformation of particles within samples, and (3) formation of crystal structures intermediate between those of smectite and kaolinite, with parts of the tetrahedral sheets missing (kaolinite-like patches). Such structures become least stable at kaolinite ~50%, when the perimeter of the kaolinite-like patches is largest and chemical changes in the octahedral sheet can occur more easily. Kaolinite layers could not be resolved by HRTEM in most cases and showed lattice fringes corresponding to superstructures. A model was established to quantify kaolinite and smectite layers in the HRTEM images with results which matched TG-derived values.