The late Permian Minnekahta Limestone of the Black Hills of South Dakota is not a typical limestone. Sandwiched stratigraphically between continental redbed siliciclastics, it is distinct in its gray-pink appearance and carbonate mineralogy and is considered a local and regional marker bed. Based on its calcite composition and stromatolites, it has previously been interpreted as a tidal flat deposit, leading to speculation of a regional late Permian marine transgression. Here, we show observations that question the original composition, reexamine and refine the sedimentary and stratigraphic characteristics, and suggest an alternate depositional environment. Petrography and x-ray diffraction indicate that the Minnekahta Limestone is dominated by an interlocking crystal mosaic of calcite and gypsum. We have documented pseudomorphs after bottom-growth gypsum crystals, alternating laminae of mm-scale bottom growth gypsum crystal shapes and mud drapes, as well as mudcracks, raindrop imprints, and stromatolites. No carbonate grains, fossils, or tidal rhythmites were noted. These observations suggest that the carbonate phase is a replacement of gypsum. In addition to the sedimentology and petrography, close stratigraphic association with overlying and underlying continental redbeds indicates that this was likely a shallow saline-lake deposit. Other Permo-Triassic carbonate strata in continental redbed sequences throughout the midcontinent of North America, such as those in the Goose Egg, Chugwater, Nippewalla, and Spearfish strata, may have similar continental origin. This study serves as a lesson that paired petrographic observations and mineral identifications are important data necessary for the best interpretation of depositional environments and diagenetic histories.