How to change margin when using shadethm package?

As cmhughes has mentioned, the mdframed package offers a lot more features and possibilities than shadethm, so I also suggest you to switch to mdframed. However, to answer your question, you can change the values for the lengths \shadeboxsep (controlling the distance between the start of color to start of text; in the four sides) and \shadetextwidth (width of the text body) , as in the following simple example in which I left 6pt between the frame and the text, but keeping the total width equal to \textwidth:

\documentclass{article} \usepackage{shadethm} \usepackage{lipsum}% just to generate text for the example \newshadetheorem{theo}{Theorem} \setlength\shadeboxsep{6pt} \setlength\shadedtextwidth{\dimexpr\textwidth-2\shadeboxsep\relax} \begin{document} \lipsum[4] \begin{theo} \lipsum[4] \end{theo} \end{document} 

A simple example with mdframed, showing some of its features; in particular, the ability to control individually (for each of the four sides) the separation between the frame and the text (this cannot be done easily with shadethm):

\documentclass{article} \usepackage{amsthm} \usepackage{xcolor} \usepackage{mdframed} \usepackage{lipsum}% just to generate text for the example \newmdtheoremenv[ hidealllines=true, innerleftmargin=8pt,% innerrightmargin=8pt,% innertopmargin=12pt,% innerbottommargin=12pt,% backgroundcolor=gray!50,% skipbelow=\baselineskip,% skipabove=\baselineskip]{theo}{Theorem} \begin{document} \lipsum[4] \begin{theo} \lipsum[4] \end{theo} \end{document}