Fissured rock masses tend to dilate as they are deformed inelastically toward failure. When the rock is fluid saturated and the time scale does not allow drainage, suctions are induced in the pore fluid, and by the effective stress principle the rock is dilatantly hardened over the resistance that it would show to a corresponding increment of drained deformation. This paper considers a compressed layer of saturated rock deformed in shear. Inelastic stress-strain relations are formulated, and these relations illustrate dilatant deformed in shear. Inelastic stress-strain relations are formulated, and these relations illustrate dilatant hardening when the layer is sheared without drainage at its boundaries. Parameters governing the slope of the hardened stress-strain curve are identified; these parameters predict a rising slope even when that presumed for homogeneous deformation under drained conditions is unstably falling. However, it is shown that the amount of dilatant strengthening that can actually be realized is limited by an instability. In particular, when the corresponding drained stress-strain curve has become unstable, small nonuniformities in the deformation field are shown to grow by local diffusive fluxes of pore fluid, and this is taken as the inception of localized shearing in a fault zone.