Intrastratal shrinkage (often termed ‘synaeresis’) cracks are commonly employed as diagnostic environmental indicators for ancient salinity-stressed, transitional fluvial-marine or marginal-marine depositional environments. Despite their abundance and use in facies interpretations, the mechanism of synaeresis crack formation remains controversial, and widely accepted explanations for their formation have hitherto been lacking. Sedimentological, ichnological, petrographic and geochemical study of shallow marine mudstone beds from the Ordovician Beach Formation of Bell Island, Newfoundland, has revealed that crack development (cf. synaeresis cracks) on the upper surface of mudstone beds is correlated with specific organic, geochemical and sedimentological parameters. Contorted, sinuous, sand-filled cracks are common at contacts between unbioturbated mudstone and overlying sandstone beds. Cracks are absent in highly bioturbated mudstone, and are considered to pre-date firmground assemblages of trace fossils that include Planolites and Trichophycus. The tops of cracked mudstone beds contain up to 2·1 wt% total organic carbon, relative to underlying mudstone beds that contain around 0·5 wt% total organic carbon. High-resolution carbon isotope analyses reveal low δ13Corg values (−27·6‰) on bed tops compared with sandy intervals lacking cracks (−24·4 to −24·9‰). Cracked mudstone facies show evidence for microbial matgrounds, including microbially induced sedimentary structures on bedding planes and carbonaceous laminae and tubular carbonaceous microfossils in thin section. Non-cracked mudstone lacks evidence for development of microbial mats. Microbial mat development is proposed as an important prerequisite for intrastratal shrinkage crack formation. Both microbial mats and intrastratal shrinkage cracks have broad palaeoenvironmental distributions in the Precambrian and early Phanerozoic. In later Phanerozoic strata, matgrounds are restricted to depositional environments that are inhospitable to burrowing and surface-grazing macrofauna. Unless evidence of synaeresis (i.e. contraction of clay mineral lattices in response to salinity change) can be independently demonstrated, the general term ‘intrastratal shrinkage crack’ is proposed to describe sinuous and tapering cracks in mudstone beds.