Abstract: A detailed clay mineralogical investigation has been conducted on shale samples from the Mio-Pliocene Tipam Sandstone and Dupi Tila Formations of the Bandarban Anticline, Bandarban Hill District, Bangladesh. The whole shale and the <2.0 μm fractions of the samples were treated for thin section petrography and XRD analysis. The predominant clay minerals identified are kaolinite, illite, mixed-layer illite/smectite, chlorite and muscovite. Mixed-layer illite/smectite forms a major group and there are indications that the diagenesis has taken place involving gradual loss of illite/smectite from younger to older rocks. The gradual decrease of the illite/smectite proportion in the random illite/smectite clay is reflected by a gradual decrease in the 17Å peak intensity which is possibly interpreted as a decrease in the percentages of smectite layers in the illite/smectite clay due to the diagenetic transformation of smectite to illite. This may be a source of additional silica to the interbedded sandstones for the generation of little quartz overgrowth cementation. It is expected that a small volume of water derived from the smectite diagenesis should have been available and migrated from smectite interlayers to the pore water system, contributing to the generation of overpressure encountered in the subsurface of Bandarban Structure. Moreover, kaolinite clay mineral displaying decreasing tendency in older rocks is amongst other diagenetic changes recorded in studied shale.