Terraced iron formations (TIFs) are laminated structures that cover square meter-size areas on the surface of weathered bench faces and tailings piles at the Mount Morgan mine, which is a non-operational open pit mine located in Queensland, Australia. Sampled TIFs were analyzed using molecular and microanalytical techniques to assess the bacterial communities that likely contributed to the development of these structures. The bacterial community from the TIFs was more diverse compared to the tailings on which the TIFs had formed. The detection of both chemolithotrophic iron-oxidizing bacteria, i.e., Acidithiobacillus ferrooxidans and Mariprofundus ferrooxydans, and iron-reducing bacteria, i.e., Acidobacterium capsulatum, suggests that iron oxidation/reduction are continuous processes occurring within the TIFs. Acidophilic, iron-oxidizing bacteria were enriched from the TIFs. High-resolution electron microscopy was used to characterize iron biomineralization, i.e., the association of cells with iron oxyhydroxide mineral precipitates, which served as an analog for identifying the structural microfossils of individual cells as well as biofilms within iron oxyhydroxide laminations—i.e., alternating layers containing schwertmannite (Fe16O16(OH)12(SO4)2) and goethite (FeO(OH)). Kinetic modeling estimated that it would take between 0.25–2.28 years to form approximately one gram of schwertmannite as a lamination over a one-m2 surface, thereby contributing to TIF development. This length of time could correspond with seasonable rainfall or greater than average annual rainfall. In either case, the presence of water is critical for sustaining microbial activity, and subsequently iron oxyhydroxide mineral precipitation. The TIFs from the Mount Morgan mine also contain laminations of gypsum (CaSO·2H2O) alternating with iron oxyhydroxide laminations. These gypsum laminations likely represented drier periods of the year, in which millimeter-size gypsum crystals presumably precipitated as water gradually evaporated. Interestingly, gypsum acted as a substrate for the attachment of cells and the growth of biofilms that eventually became mineralized within schwertmannite and goethite. The dissolution and reprecipitation of gypsum suggest that microenvironments with circumneutral pH conditions could exist within TIFs, thereby supporting iron oxidation under circumneutral pH conditions. In conclusion, this study highlights the relationship between microbes for the development of TIFs and also provides interpretations of biogeochemical processes contributing to the preservation of bacterial cells and entire biofilms under acidic conditions.