Clays are a prevalent constituent of the McNutt Potash Member of the upper Salado Formation (Permian), New Mexico. The mode of clay distribution is varied and is an important indicator of fluid movement. Clays in the study area occur as thick clay seams (up to 4 cm), disseminated deposits, and as linings on crystal contacts of evaporite minerals. These different occurrences represent different conditions during evaporite deposition: 1) Thick clay seams represent major incursions of fresh seawater diluting the brine in the shallow Delaware basin; 2) disseminated deposits represent undisturbed portions of primary evaporite deposition; and 3) clay linings on langbeinite and sylvite depict percolation of solutions that dissolve preexisting minerals, resulting in deposition of clays during downward migration of the solution front. Although the clay chemistry varies little, the clay mineralogy differs with respect to its associated evaporite mineralogy. Low-charge corrensite is associated with potassium-deficient salts like halite, anhydrite, and polyhalite. High-charge corrensite is associated with potassium-rich salts like sylvite and langbeinite. Three modes of evaporite diagenesis are invoked to explain the major evaporite mineral assemblages in the McNutt Potash Member. Syndepositional alteration best explains the occurrence of polyhalite. Burial diagenesis fits well in explaining the minor amounts of kainite replacing langbeinite in (or near) clay-rich areas. Retrograde diagenesis seems to be the dominant mechanism responsible for formation of the potash bitter salts. The retrograde process involves percolation of fresh seawater into poorly crystallized strata, causing the replacement of primary salts like kainite, kieserite, and carnallite with secondary salts like langbeinite, sylvite, and loewite.