Well‐developed oncoids and centimetre‐sized stromatolites are reported for the first time from the Darriwilian (Middle Ordovician) cool‐water ‘orthoceratite limestone’ at Kinnekulle, Västergötland, Sweden. The characteristics and stratigraphical distribution of these microbialites show an apparent relationship to fluctuations in relative sea level. The most abundant and well‐developed oncoids occur in stratigraphical intervals that are characterized by notable sea‐level lowstands. Stromatolites, which share many compositional characteristics with the oncoids, are essentially confined to a single bed associated with an especially prominent lowstand. Stromatolite‐like lamination also occurs in the uppermost part of the studied succession, but this feature may be of abiogenic origin. The microbialites appear to be originally calcareous, but synsedimentary iron‐ and/or phosphate‐enriched laminae are conspicuous, and secondary substitution by coarse calcite and barite is common. Iron staining is most prominent in poorly preserved specimens. Diagenesis has occluded the identity of the producers of these microbialites, but characteristics of associated endolithic borings suggest that they were formed in photic waters. The laminated fabrics of the documented microbialites record a depositional environment sensitive to high‐frequency environmental change. Most significantly, the microbialites have provided important information about the depositional environment of their enigmatic host limestone, and the collective observations challenge the notion that the studied strata were deposited in a deep shelf to basinal environment – rather, it appears that they are to a large extent, shallow‐water deposits, formed in waters only a few tens of metres deep.