The southern margin of Euiseong sub-basin north of Mt. Palgong, Daegu is composed of Cretaceous elastic sediments, which were intruded by Palgongsan granitic rocks at the end of Cretaceous period. During investigation of the heavy minerals extracted from the sediments, plenty of the unstable heavy minerals like epidote and garnet etc. compared to other parts of Kyungsang basin necessitated the study of depositional environment and diagenesis of the sediments. The occurrence of those unstable heavy minerals such as epidote and garnet seems to be associated with intrusion of Palgongsan granite and accompanied metamorphism. Twenty four representative specimens throughout the area were studied for grain size analysis and clay mineralogy. The grain size ranges from fine to medium sand fraction, showing fining upward trend from Nagdong through Hasandong, Jinju, Iljig, Hupyeongdong to Jeomgog formations. The sand grains are moderately sorted, normal to very negatively skewed, and mesokurtic. The bivariant grain size analysis tests such as skewness vs standard deviation (Friedman, 1967) and mean diameter vs standard deviation (Moiola and Weiser, 1968) strongly suggest fluvio-lacustrine environment. The clay minerals extracted from eight of the specimens are illite and chlorite . Mixed layer clay minerals are not identified. Illite crystallinity of the illite diffraction peaks was discussed in relation to diagenesis. The illite crystallinity ranges from 2.23° to 6.20°(Weaver index values) and from 0.25 2B to 0.60° 2θ (Kubler index values) and strongly suggests that some of the specimens already passed through zone of diagenesis and transfered to anchizone.