Evaporites are concentrated in the northern part of the Northern Shelf of the Midland Basin, and carbonates to the south. Palo Duro Basin carbonates in the lower part differ from those in the upper part in containing skeletal lithofacies and in having lower Mn, Fe, and terrestrial organic content. Br content in halite in the lower part is high, whereas halite in the upper part is Br depleted. Low delta 13 C values in dolomite and low pristane/phytane ratios occur toward the south. Na/Cl and K/Cl ratios are characteristic of marine brines evaporated beyond halite saturation. Na in the dolomite lattice is generally low. The lower part of the formation was deposited in a broad shelf basin or lagoon. The upper part of the formation was deposited in smaller water bodies sensitive to inflow of marine and meteoric water. Diagenesis occurred in contact wih saline Mg-Ca-chloride brines. Skeletal mold formation, anhydrite cementation, dolomitization, and high Sr calcite cementation associated with celestite are cogenetic products. delta 18 O indicates apparent equilibrium relationships with the same solution. Temperatures never exceeded 40 to 45 degrees C, and imply the delta 18 O to be 3%%. The depleted delta 18 O composition of the brine resulted from the reversal in the dependence of delta 18 O on increased evaporation in highly saline brines. Following early diagenetic processes, the rock sequence remained as a closed, compacting, system unchanged by later fluid introduction. Low Sr values in dolomite are indicative of recrystallization.--Modified journal abstract.