Mineralogical analyses of a series of Paleozoic shales from Illinois show that illite and chlorite are present in all of them with the former the dominant component. Kaolinite is sometimes present in minor amounts. A review of the literature, regarding the occurrence of the clay minerals and an analysis of the general environmental conditions favorable for the formation of the various clay minerals, indicates that marine shales are likely to be composed of the mica clay minerals, sometimes with minor amounts of kaolinite, and that nonmarine shales are likely to have kaolinite as a prominent component with lesser amounts of the three-layer clay minerals. The probable diagenetic changes in marine argillaceous sediments are discussed, and it is suggested that there are two stages of such changes; namely, a rapid development of well crystallized mica from "degraded illite" and "degraded chlorite" taking place about as rapidly as such material is brought to the sea, and a slow gradual change of montmorillonite and kaolinite to the micas. The relation of these changes to variations in the environment, in the source material, and rate of accumulation are considered.