Field and laboratory investigations indicate that phyllonite within the Santa Rosa mylonite zone developed from granodiorite without hydrous alteration of the original mineral assemblage. Initial grain-size reduction within zones of phyllonite was accomplished through whole-rock cataclasis; subsequent deformation occurred through ductile flow. The original cataclastic failure is recorded by sharp boundaries with the surrounding rock, which are retained through the ductile overprint. Biotite in phyllonite has a mean grain size of ~3 μm and exhibits straight boundaries and a strong crystallographic preferred orientation. Trace analyses of HVEM images indicate that the largest biotite grains are most strongly oriented, and the grains are elongate parallel to lineation. TEM observations indicate that typical grains have irregularly spaced stacking faults and twins. Evidence for intracrystalline folding and cataclasis, present in protomylonite and mylonite, is absent; bending or kinking of grains is rare. These observations suggest that biotite in phyllonite accommodated deformation through dynamic recrystallization in concert with intracrystalline slip and mechanical rotation. Grain-size reduction to form phyllonite is accompanied by macroscopically and microscopically visible changes in the character of foliations in the rock. We suggest that these changes are linked to the deformation mechanisms operating within the fine-grained phyllonite.