Peritidal ferruginous microbialites form the main bulk of the Middle Eocene ironstone deposits of the Bahariya Depression, Western Desert, Egypt. They include ferruginous stromatolites and microbially coated grains (ferruginous oncoids and ooids). Their internal structures reveal repeated cycles of microbial and Fe oxyhydroxide laminae. The microbial laminae consist of fossilised neutrophilic filamentous iron-oxidising bacteria. These bacteria oxidised the Fe(II)-rich acidic groundwater upon meeting the marine water at an approximately neutral pH. The iron oxyhydroxide laminae were initially precipitated as amorphous iron oxhydroxides and subsequently recrystallised into nanocrystalline goethite during early diagenesis. Organic remains such as proteinaceous compounds, lipids, carbohydrates and carotenoids are preserved and can be identified by Raman spectroscopy. The ferruginous microbialites were subjected to post-depositional subaerial weathering associated with sea-level retreat and subsurface alteration by continued ascent of the Fe(II)-rich acidic groundwater. At this stage, another iron-oxidising bacterial generation prevailed in the acidic environment. The acidity of the groundwater was caused by oxidation of pyrite in the underlying Cenomanian Bahariya formation. The positive iron isotopic ratios and presence of ferrous and ferric iron sulphates may result from partial iron oxidation along the redox boundary in an oxygen-depleted environment.