The structure, texture, composition, and capillary-pressure resistance were assessed for shale deformed along a normal fault with 9 m (29 ft) of dip separation. Shale is entrained from a 1.6-m (5-ft)thick source layer into the fault zone and attenuated to about 5 cm. (2 in.). A quantitative analysis of shale mineral composition indicates that little material is contributed to the fault rock from the sandstone units that over- and underlie the shale source layer. This finding is in contrast to common predictive models of fault sealing that assume mechanical wear along the fault surfaces. Instead, shale entrainment is inferred to result from incipient distributed shear across a zone of deformation bands in the over- and underlying sandstone, granular flow of the shale, and the increasing localization of deformation in the shale core or along the shale-sandstone interfaces of the evolving fault zone. The composition of deformed shale indicates the effective mixing of clay- and quartz-rich layers of the shaly source unit by granular flow during shale deformation. Capillary displacement pressures of deformed shale are 30% higher compared to the most clay-rich undeformed shale outside the fault. This increase in sealing capacity, in combination with a 50% anisotropy in capillary displacement pressure, is primarily attributed to the development of a planar fabric in deformed shale. Enhanced clay diagenesis likely contributed to the increase in shale sealing capacity. We conclude that fault seal by shale entrainment involves a variety of structural, textural, and diagenetic processes that require an integrated methodology for improved predictions of fault-sealing capacity.