Late-stage dehydration of shales containing montmorillonite or highly expandable illite-montmorillonite consists of the conversion of montmorillonite to illite layers, thus removing interlayer water. This conversion involves interlayer potassium fixation and probably is a result of ionic substitution within the montmorillonite alumino-silicate layer. Therefore, the rate at which dehydration takes place--and, indeed, whether it takes place at all--should be dependent on the chemical conditions of diagenesis, particularly pore-water composition. Detailed X-ray diffraction studies of cuttings from several Gulf Coast wells have resulted in a quantitative interpretation of late-stage dehydration of shales, caused by loss of interlayer water in montmorillonite. In the wells studied late-stage dehydration begins in the depth range of 6,000-8,000 ft and continues over a stratigraphic interval of 4,000-10,000 ft or more. Higher geothermal gradients result in shorter dehydration intervals. Montmorillonite dehydration rates reach maxima at the very inception of the diagenetic reaction and very near its close, when new illite layers are introduced into the illite-montmorillonite in an ordered fashion. At the close of the diagenetic reaction the illite-montmorillonite still contains about 20 percent hydrated layers which persist to tota depth in all wells studied. The temperature of inception of late-stage dehydration, as well as of its close, appears to be dependent on pressure, but other parameters such as pore-water chemistry may be equally important.