Oxygenation of the Proterozoic atmosphere caused the progressive build-up of dissolved sulphate on the continents and in marine environments. However, oxygen levels in the Proterozoic were low enough to allow the early burial of biological material into low redox potential environments where permineralization and the authigenic replacement of organic material, including micro-organisms, occurred by a range of minerals. Consequently, microbial sulphate reduction caused the widespread degradation of organic matter and, where iron was available, the precipitation of pyrite. By contrast, where sulphate levels were low, early preservation by other minerals (e.g. phosphate or silica) could be excellent. We show, using two Proterozoic lake sequences with low and high sulphate chemistries, but with otherwise similar characteristics, that microbial sulphate reduction caused a profound loss of morphological detail and diversity within preserved microfossils. The results could imply that there is a significant bias in the Proterozoic fossil record towards low sulphate environments, which were in reality relatively scarce.