The role of carbon dioxide in regulating climate during the early Paleozoic, when severe glaciations occurred during a putative greenhouse world, remains unclear. Here, we present the first molecular carbon isotope proxy-based estimates for Late Ordovician (early Katian) pCO2 levels, and explore the limitations of applying this approach to the reconstruction of Paleozoic pCO2. Carbon isotope profiles from three sites in Laurentia (Iowa, Ontario and Pennsylvania) and one site in Baltica (Estonia) exhibit overall low isotope fractionation between organic and inorganic carbon during photosynthesis (εp) and these values declined during the early Katian carbonate carbon isotope excursion (or Guttenberg Carbon Isotope Excursion, GICE). Algal εp values are sensitive to changes in CO2 concentrations, algae cell morphologies, and cell growth rates. To constrain these factors, we present molecular evidence that a decrease in the relative abundance of cyanobacteria and a change in the eukaryotic algae community co-occurred with the GICE. Regardless of local biotic or oceanographic influences, a decline in εp values indicates photosynthesis was sensitive to carbon concentrations, and via analogy with modern taxa, constrains pCO2 to below ∼8× pre-industrial levels (PIL), or about half of previous estimates. In addition, the global, positive carbon isotope excursions expressed in a wide variety of sedimentary materials (carbonate, bulk organic matter, n-alkanes, acyclic and cyclic isoprenoid hydrocarbons), provide compelling evidence for perturbation of the global carbon cycle, and this was likely associated with a decrease in pCO2 approximately 10 million years prior to the Hirnantian glaciations. Isotopic records from deeper water settings suggest a complex interplay of carbon sources and sinks, with pCO2 increasing prior to and during the early stages of the GICE and then decreasing when organic carbon burial outpaced increased volcanic inputs.