Microbial metabolism impacts the degree of carbonate saturation by changing the total alkalinity and calcium availability; this can result in the precipitation of carbonate minerals and thus the formation of microbialites. Here, the microbial metabolic activity, the characteristics and turnover of the extracellular polymeric substances and the physicochemical conditions in the water column and sediments of a hypersaline lake, Big Pond, Bahamas, were determined to identify the driving forces in microbialite formation. A conceptual model for organomineralization within the active part of the microbial mats that cover the lake sediments is presented. Geochemical modelling indicated an oversaturation with respect to carbonates (including calcite, aragonite and dolomite), but these minerals were never observed to precipitate at the mat–water interface. This failure is attributed to the capacity of the water column and upper layers of the microbial mat to bind calcium. A layer of high Mg-calcite was present 4 to 6 mm below the surface of the mat, just beneath the horizons of maximum photosynthesis and aerobic respiration. This carbonate layer was associated with the zone of maximum sulphate reduction. It is postulated that extracellular polymeric substances and low molecular weight organic carbon produced at the surface (i.e. the cyanobacterial layer) of the mat bind calcium. Both aerobic and anaerobic heterotrophic microbes consume extracellular polymeric substances (each process accounting for approximately half of the total consumption) and low molecular weight organic carbon, liberating calcium and producing inorganic carbon. The combination of these geochemical changes can increase the carbonate saturation index, which may result in carbonate precipitation. In conclusion, the formation and degradation of extracellular polymeric substances, as well as sulphate reduction, may play a pivotal role in the formation of microbialites both in marine and hypersaline environments.