A detailed investigation of microstructures of authigenic illite has been carried out using high-resolution TEM. Near-atomic images of 1M and 2M1 polytypes of illite with incidence  and  were observed. We unambiguously determine 1M illite in both individual particles and microtwinned domains. Newly formed 2M1 domains are surrounded by former packets of 1Md or 1M illite. Such intergrowth of different illite-polytypic domains on a scale of several layers suggests that they are metastable. The lateral-coherent 1M and 2M1 illite domains are aligned along the same orientation and crystallographically continuous normal to *. This is a new phenomenon observed for polytypic intergrowth and transition. The intralayer-stepwise change of stagger direction in a series of successive layers and consequently the interlayer-stacking angle change resulting in polytypic transition are hypothesized as an “intralayer-stepwise transition” model. It explains the process of illite polytypic transition in the solid state.