To make a better understanding of the stratigraphic correlation and ocean processes during the transition from Series 2 to Series 3 in the Cambrian, this study investigated the characteristics and origin of the palaeokarst in the uppermost part of the Longwangmiao Formation (Toyonian) and established the carbon isotopic curves of the shallow‐water succession. Macroscopically, the palaeokarst features have been identified, including the exposed surface, karstic trough, discolouration, and breccia in the upper part of the Longwangmiao Formation. The exposed surface is divided into the bedrock, weakly weathering zone, intensely weathering zone, dissolved‐collapsed zone, and weathering clay layer at the Dingzhai section. The reddish aluminous oxide and the stratiform‐dissolved pore are recognized in the Gaodongmiao section. The clast‐support breccia and matrix‐support breccia develop in the palaeokarst zone. Microscopically, three dissolution‐filling zones in grainstone (the matrix zone, half‐dissociated zone, and mixed‐filling zone) dissolved fibrous cement in the early diagenetic stage, microspar cement in a bright homogeneous luminescence, and medium‐crystal calcite showing a zonation luminescence are identified indicating the facies‐controlled attributes. The δ13C values are characterized by a lower range (4.4‰ to −2.1‰) in the karst zone. The REE pattern shows enriched middle REE, negative Eu anomalies, and low Y/Ho ratio, which is different from the nature of seawater. It is proposed that the palaeokarst in the upper part of the Longwangmiao Formation is the eogenetic karst controlled by high‐frequency sea‐level fluctuations. Two negative δ13C excursions (values −4.4‰ in D2 and −3.6‰ in D1) are respectively recognized, the top boundary and middle part of the Longwangmiao Formation. Based on the regional and global correlations, the excursion of D2 is the diagenetic signal in the shallow‐water setting, which correlated to ROECE event (Redlichiid‐Olenellid Extinction Carbon isotope Excursion) that occurred around the boundary between Series 2 and Series 3 in the Cambrian. The local signal of D2 is attributed to the sea‐level falling.