Organic matter in the Upper Cretaceous Mancos Shale adjacent to the Tocito Sandstone in the San Juan Basin of New Mexico was characterized using organic petrology and organic geochemistry. Differences in the organic matter found in these regressive and transgressive offshore marine sediments have been documented and assessed within a sequence stratigraphic framework. The regressive Lower Mancos Shale below the Tocito Sandstone contains abundant well preserved phytoclasts and correspondingly low hydrogen indices. Total organic carbon values for the regressive shale are low. Sediments from the transgressive systems tract (Tocito Sandstone and overlying Upper Mancos Shale) contain less terrestrially derived organic matter, more amorphous non-structured protistoclasts, higher hydrogen indices and more total organic carbon. Advanced stages of degradation are characteristic of the phytoclasts found in the transgressive shale. Amorphous material in the transgressive shale fluoresces strongly while that found in the regressive shale is typically non-fluorescent. Data from pyrolysis-gas chromatography confirm these observations. These differences are apparently related to the contrasting depositional styles that were active on the shelf during regression and subsequent transgression. It is suggested that data from organic petrology and organic geochemistry provide greater resolution in sedimentologic and stratigraphic interpretations, particularly when working with basinward, fine-grained sediments. Petroleum source potential for the regressive Lower Mancos Shale below the Tocito Sandstone is poor. Based on abundant fluorescent amorphous material, high hydrogen indices, and high total organic carbon, the transgressive Upper Mancos Shale above the Tocito Sandstone possesses excellent source potential. This suggests that appreciable source potential can be found in offshore, fine-grained sediments of the transgressive systems tract below the condensed section and associated downlap surface. Organic petrology can be used to accurately predict petroleum source potential. The addition of simple fluorescence microscopy greatly enhances this predictive ability because non-generative amorphous material is generally non-fluorescent. Organic petrology must also be used to properly evaluate the utility of Tmax from programmed pyrolysis as a thermal maturity indicator. Organic matter dominated by autochthonous amorphous protistoclasts exhibits lower Tmax values than that which is composed of mostly phytoclasts. ?? 1991.