Thick quartz arenite formations in the Upper Silurian Grampians Group of southeastern Australia have been previously interpreted as fluvial deposits, but detailed study of one of these formations, the Mount Difficult Sandstones, shows that shallow-marine conditions existed during their deposition in the southeastern part of the Grampians Basin. The Mount Difficult Sandstones are a succession of cross-bedded quartz arenites with an overall fining-upward trend. Four lithofacies associations are recognized: the two lower associations record tidally dominated sedimentation, whereas the two upper associations represent deposition in wave-dominated environments. Boundaries are gradational, and the associations arc interpreted as four spatially and genetically related environments within a tidal-inlet and barrier-beach system. The basal tidal-inlet channel-fill complex overlies an erosion surface on tidally influenced coastal-plain deposits of the Silverband Formation. Vertically stacked fining-upward channel fills record lateral migration of tidal channels during transgression. The overlying association was deposited in mixed tide-wave conditions, and tidal-channel margin to ebb-tidal delta environments seaward of the inlet are proposed. The development of tidal-inlet channels and a tidal delta suggests deposition of the Mount Difficult Sandstones in a mesotidal setting (tidal range 2-4 m) with a time-velocity asymmetry dominated by ebb-tidal currents. The increasing influence of waves is recorded by barrier-beach deposits that migrated over the inlet-delta system. The barrier beach is represented by two lithofacies associations, interpreted as upper-shoreface and overlying foreshore deposits, an arrangement that signals a change from transgressive to regressive (progradational) conditions. Thus, the Mount Difficult Sandstones represent a single transgressive-regressive cycle (most likely third-order) that was controlled mainly by the rate of subsidence in the tectonically active Grampians Basin, under conditions of a relative highstand of sea level and high rates of sediment supply.