Because the Bayan Mandahu redbeds of Inner Mongolia share similar sedimentary facies and fossil assemblages with the Djadokhta Formation of pre-Altai Gobi, the two units are interpreted as stratigraphic correlatives, both of Campanian age. Sedimentary facies indicate that the Bayan Mandahu redbeds were deposited in semiarid, alluvial to eolian environments. An assemblage of fossil vertebrates found in the Bayan Manduhu consists of ceratopsian, ankylosaurian, and theropod dinosaurs; turtles; crocodiles; and small lizards and mammals. Six different kinds of fossil vertebrate eggs are present. The most common fossil vertebrates occur in association with eolian deposits and are interpreted as the remains of autochthonous "faunal" components, many of which died in situ during sandstorm events. In contrast, rare and fragmentary specimens of large dinosaurs occur in coarse-grained alluvial deposits and are interpreted as the remains of allochthonous faunal components. The low diversity of this fossil assemblage and overall small to medium size of its constituents indicate a relatively stressed paleoenvironment, an interpretation which is compatible with our sedimentological conclusions. A diverse trace fossil assemblage is present and includes rhizoliths and endogenic traces. Endogenic traces are well preserved and typically associated with eolian deposits, suggesting that the deposits were at least seasonally damp and cohesive. The opinion that the Late Cretaceous Gobi Basin was a large inland lake, still advocated by some authors, cannot be maintained within the context of our sedimentologic and paleontologic data. In contrast with the perennial lacustrine sedimentation that was characteristic of the underlying Lower to lower Upper Cretaceous units in the Gobi Basin, the Bayan Mandahu redbeds and correlative Djadokhta Formation mark a pronounced shift toward eolian and intermittent lacustrine sedimentation in an increasingly arid climate.