Phosphorites of the late Neoproterozoic Doushantuo Formation exposed in the vicinity of Weng'an, Guizhou Province, and Chadian, Shaanxi Province, South China, contain exceptionally well-preserved algal thalli, acritarchs, and globular microfossils interpreted as animal embryos. Combined optical microscopic and SEM observations provide insights into the taphonomy of phosphatized fossils. Algal cells and tissues are variably resistant to decay, and within preserved populations permineralization began at varying stages of degradation. In consequence, there is a spectrum of quality in cellular preservation. Algal cell walls, acritarch vesicles, and embryo envelopes are commonly encrusted by an isopachous rim of apatite, with cell interiors filled by collophane and later diagenetic dolomite. In contrast, blastomere surfaces of animal embryos are encrusted primarily by minute phosphatic spherules and filaments, possibly reflecting an immediately postmortem infestation of bacteria that provided nucleation sites for phosphate crystal growth. Thus, the same processes that gave rise to Phanerozoic phosphatized Lagerstätten - phosphatic encrustation, and impregnation, probably mediated by microbial activity - effected soft-tissue preservation in the Doushantuo Lagerstätte. It remains unclear how phosphatic ions and organic macro-molecules interact at the molecular level and to what extent specific microbial metabolisms or microenvironmental conditions control the phosphatization of soft tissues. New observations of phosphatized Doushantuo fossils include: a second locality (Chadian) for Wengania globosa, interpreted as an algal thallus and previously known only from Weng'an; microtunnels in Weng'an phosphorites interpreted as pyrite trails; and new taxa described from Weng'an: Meghystrichosphaeridium reticulatum (acritarch), Sarcinophycus radiatus (algal thallus), and one unnamed problematic form.