Sedimentary facies characterization was carried out on the Ajali Sandstone of southeastern Nigeria in order to deduce its depositional settings. Twelve lithofacies identified from the formation were grouped into subtidal channel facies and subtidal sandwave facies based on association. Grain size ranges from fine to coarse and pebbly sandstones with minor clay content in places. Textural analysis shows that on the average, the sandstone is moderately well sorted, near symmetrically skewed and mesokurtic. Cross bedding is characteristics. Tide generated sedimentary structures such as herringbone cross beddings, tidal bundles, reactivation surfaces, clay drapes and clay flasers suggest tidal dominance over wave process. Vertical burrows of Ophiomorpha and Skolithos show colonization of only suspension feeders typical of high energy environment. Clasts of clay occur and can be attributed to reworking of the sediments by tidal currents. The bivariate scatter plots of the discriminate functions calculated from grain size data indicate deposition of the sandstones in a predominantly shallow marine/subtidal environment. Ajali Sandstone is deposited in subtidal channel and subtidal sandwave environments.