The hypothesis that chemical remanent magnetization (CRM) in argillaceous rocks may be due to release of Fe during smectite illitization has been tested by study of spatial and temporal relationships of CRM acquisition, smectite illitization, and organic-matter maturation to deformation in the Montana Disturbed Belt. New K-Ar ages and stacking order and percentages of illite layers in illite-smectite (I-S) are consistent with conclusions from previous studies that smectite illitization of bentonites in Subbelts I and II of the Disturbed Belt was produced by thrust-sheet burial resulting from the Laramide Orogeny. Internally concordant, early Paleogene, K-Ar age values (55–57 Ma) were obtained from clay subfractions of thick bentonites which were significantly different in terms of their ages (i.e. Jurassic Ellis Formation and late Cretaceous Marias River Shale), further supporting a model of smectite illitization as a result of the Laramide Orogeny. Internally concordant K-Ar ages were found also for clay sub-fractions from a thick bentonite at Pishkun Canal (54 Ma) and from an undeformed bentonite near Vaughn on the Sweetgrass Arch (48 Ma). In Subbelts I and II, a greater degree of smectite illitization corresponds to increased thermal maturation, increased natural remanent magnetization intensity, and increased deformation (dip of beds). A dissolution-precipitation model over a short duration is proposed for the formation of illite layers in Subbelts I and II. A characteristic remanent magnetization was developed before or just after folding began in the early Paleogene. More smectite-rich I-S, low thermal maturity, and the absence of a CRM were noted in one outcrop of an undeformed rock on the Sweetgrass Arch. Strontium isotope data allow for the possibility that internal or externally derived fluids may have influenced illitization, but the K-Ar age values suggest that illitization was probably in response to conductive heating after the overthrusting had occurred. The differences in K-Ar dates among the bentonites studied herein may be due to differences in the timing of peak temperature related to differences in distance below the overthrust slab, in rates of burial and exhumation, and in initial temperature.