A thin (-1.5 m) transgressive systems tract within the Lower Paleocene Clayton Formation of western Alabama, composed of, in ascending order, a sandy pebbly marlstone (transgressive lag), calcareous muds, and a chalk (condensed section), contains an unusual abundance of allochthonous logs with Teredolites, a clavate boring produced within xylic substrates. Borings are characterized by diameters ranging from 1 to 15 mm, high length/width ratios, contorted axes oriented primarily parallel to the grain of substrates, calcite linings, and rare terminal bioglyphs. Although no body fossil evidence for the affinity of the boring organisms is preserved, these morphological characteristics, which are most allied with the ichnotaxon T. longissimus, reflect the boring activities of wood-digesting bivalves of the family Teredinidae. On the basis of the preservational state of associated log-grounds and the disposition of borings relative to their original substrates, Teredolites falls within one of four preservational modes: 1) well-preserved log-grounds, 2) relict log-grounds, 3) ghost log-grounds, and 4) reworked Teredolites. The first three of these modes represent a continuum in the extent of biochemical degradation of xylic substrates during early diagenesis, whereas the latter mode reflects physical reworking (within depositional environments) of borings liberated from their original substrates. The degree of physical alteration and chemical diagenesis of Teredolites varies predictably among these modes. The overall abundance of xylic substrates and the vertical and spatial distribution of the various preservational modes within the transgressive systems tract are linked to three mechanisms, all of which are related to phases of sea-level rise: 1) an influx pulse of xylic substrates into marine and marginal marine environments resulting from the transgressive inundation of forested coastal plains; 2) mechanical reworking and concentration of xylic substrates that were uprooted or exhumed during progressive landward migration of the shoreface; and 3) concentration of drifted substrates via sediment starvation on marine shelves. Ongoing studies of other depositional sequences and review of previous literature provide support for the proposed relationships among sea-level dynamics and the stratigraphic distribution, abundance, and preservational states of xylic substrates and/or Teredolites. However, further investigations are required in order to establish better the range of conditions necessary to produce and preserve extraordinary accumulations of these components such as that in the Clayton Formation.