Stromatactis‐bearing mud‐mounds remain an enigmatic reef type despite being common in Palaeozoic ramp settings. Two well preserved Upper Devonian (Frasnian) mud‐mounds in the Mount Hawk Formation crop out side by side in the southern Rocky Mountains of west‐central Alberta and provide an opportunity to develop a new case study that can be compared with the other coeval examples, such as those well‐known ones in southern Belgium, as well as evaluate competing hypotheses for mud‐mound formation. The southern mud‐mound is 46·2 m thick and 38·6 m wide at the base, whilst the northern one is 53·3 m thick and 72·2 m wide at the base, and they exhibit three or four growth stages indicated by interfingering and onlapping geometries with flanking strata. The biota is diverse, but fossils only occupy 10·7% by volume, among which sponge spicules, echinoderms, ostracods, brachiopods and calcimicrobes belonging to Girvanella and Rothpletzella are the most common. Five microfacies are discriminated in the mud‐mounds: biomicrite, clotted micrite, spiculite, stromatolite and laminite, with clotted micrite comprising the largest proportion. There is no internal vertical or lateral palaeoecological zonation, and the presence of calcimicrobes and calcareous algae throughout indicates accretion entirely within the photic zone, in a deeper ramp setting seaward of a large carbonate platform to the east. Stromatactis is abundant and the cavities were mostly due to excavation by currents rather than physical collapse of spiculate siliceous sponges. Formation of lime mud involved a combination of multiple organisms, mechanisms and processes. Cyanobacteria were integral to mud‐mound frame‐building and accretion because they stabilized the surface, often permineralized to form Girvanella and provided organic matter that was decomposed by bacteria. This induced precipitation of micrite, forming early indurated rigid masses, evidenced by the presence of intraclasts, stromatactis cavities, isopachous marine cements, absence of bioturbation and rare synsedimentary brittle deformation. The same microbial components, invertebrate biota and clotted micrite occur in underlying strata, suggesting that there was a protracted period of potential mud‐mound initiation before the exact conditions arose to trigger it. The ramp setting, antecedent sea floor topography and relative sea‐level likely contributed together to control this. This study indicates that mud‐mound formation was controlled by a combination of processes, but they are essentially a microbial buildup.