The Upper Miocene Mustafapaşa member of the Ürgüp Formation in the Cappadocia region consists predominantly of mudstones, sandstone, and conglomerate lenses with ignimbrite and basalt intercalations. The mudstones are an important source of raw materials for the ceramics industry in Turkey. A detailed mineralogical, geochemical, and genesis study of these materials has not been performed previously and the present study aims to fill that gap. The characteristics of mudstones of the Mustafapaşa member were examined using X-ray diffraction, scanning and transmission electron microscopy, energy dispersive spectroscopy, and chemical analyses. Weathering products of ophiolitic and pyroclastic rocks were transported into the tectonically subsided zone where they accumulated as fluvial and lacustrine deposits. Weathering in the mudstones is evidenced by smectite flakes associated with relict pyroxene, rodlike amphibole, feldspar, and volcanic glass. The chemical composition of mudstones and their distribution suggest that the depositional basin was supplied with ophiolitic material in the south and ignimbrite material in the north. This interpretation is based on an increase in the quantity of feldspar and opal-A and a decrease in the Fe2O3+MgO/Al2O3+SiO2 ratio from south to north in the study area. The northward increases in Light Rare Earth Elements/Heavy Rare Earth Elements, La/Yb, Zr/Ni and Zr/Co ratios and Nb, Ba, Rb, Sr, and Eu in the mudstones of the Mustafapaşa member with positive Eu anomalies suggest that the Fe, Mg, Al, and Si required to form smectite were supplied mainly through the decomposition of amphiboles, pyroxenes, feldspars, and volcanic glass during weathering processes. After the deposition of mudstones, relative increases in evaporation-controlled Ca, K, and Al in pore water favored the partial dissolution of Ca-bearing minerals and smectite flakes and in situ precipitation of calcite and traces of illite fibers under alkaline micro-environmental conditions during early diagenesis.