Lamarck based his theory on two observations:

• Use and disuse - Individuals lose characteristics they do not require (or use) and develop characteristics that are useful.
• Inheritance of acquired traits - Individuals inherit the traits of their ancestors.

1. In every animal which has not passed the limit of its development, a more frequent and continuous use of any organ gradually strengthens, develops and enlarges that organ, and gives it a power proportional to the length of time it has been so used; while the permanent disuse of any organ imperceptibly weakens and deteriorates it, and progressively diminishes its functional capacity, until it finally disappears.
    
2. All the acquisitions or losses wrought by nature on individuals, through the influence of the environment in which their race has long been placed, and hence through the influence of the predominant use or permanent disuse of any organ; all these are preserved by reproduction to the new individuals which arise, provided that the acquired modifications are common to both sexes, or at least to the individuals which produce the young.

In essence Lamarck said: a change in the environment brings about change in needs, resulting in change in behavior, bringing change in organ usage and development, bringing change in form over time - and thus the gradual transmutation of the species.