TEM/AEM study of a sequence of shales from the Salton Sea Geothermal Field revealed that the mechanism for the reaction of smectite to form illite is markedly different from that for Gulf Coast sediments. Illite in Salton Sea shales occurs principally as individual, euhedral-to-subhedral, pseudohexagonal crystals in open pore space. Smectite was not observed by TEM in proximity to such illite and is shown by XRD data to decrease in amount with depth as the proportion of illite increases. Illite is thus implied to be derived by complete dissolution of smectite (and other phases?), transport of components, and crystallization of illite from solution. However, in shallow sediments detrital smectite is also observed to be in part directly replaced by illite in a manner duplicating Gulf Coast textures. The mechanism by which smectite undergoes complete dissolution to allow precipitation of illite at a distant site is compatible with an open system such as the Salton Sea sediments, characterized by high water/rock ratio and relatively high permeability. In contrast, the mechanism involving a reaction front where the smectite is directly replaced by illite, such as occurred in Gulf Coast shales, is compatible with relatively impermeable shales.