The permeability and strength of San Andreas fault gouge from the Cienega Valley was measured under confining pressures up to 2 kbar. The gouge was composed almost entirely of clay minerals, predominantly montmorillonite and mixed-layer clays. Permeabilities ranged between 1 and 10 nanodarcies for confining pressures of a few hundred bars to 1 kbar, and less than 1 nanodarcy for pressures greater than 1 kbar. Permeability was sensitive to confining pressure and differential stress, but did not depend significantly on accumulated strain. The low strength of saturated clay is often attributed to the buildup of excess pore pressure as the clay is stressed. These experiments, performed under drained conditions where excess pore pressure was not created, suggest that lossely bonded interlayer water in the hydrated clays can generate a pseudo-pore pressure that serves to lower the strength of the gouge.