Microbial communities regained prominence in the Cambrian after a prolonged downturn in the Neoproterozoic, but the reasons for their revival are unclear. The earliest microbialites formed during this period within the Tarim Basin are well displayed in the Xiaoerbulake Formation in the Keping area. Major, trace, rare earth element (REE) analyses were carried out using samples collected from two sections of the Xiaoerbulake Formation which present two different palaeogeographical settings, namely, the intraplatform and platform margin. The samples were divided into seven groups based on their REE + Y (yttrium) distributions. Among these, the YG3, YG4, and PG3 groups correspond to microbial boom phases. The high contents of Al and other nutrient elements (e.g., P, Ni, U, Cu, Fe, Mn) in these three groups indicate that the microbial booms are controlled by nutrient concentration of different sources. In relatively deep‐water settings, aeolian dust and suspension particles modified the seawater geochemical characteristics to form shale‐like (REE + Y)N patterns. The nutrient‐rich fine‐grained deposits were blown up by storms and released nutrients. This eutrophication ultimately promoted microbial development and is demonstrated by light rare earth element enrichment patterns. In shallow‐water environments, microbes seemed to prefer quiet conditions, with sufficient nutrients provided by fluvial influx. In contrast, excess clastic materials inputs, be they carbonate or terrigenous debris, are unfavourable to the development of microbialites. Hence, it is expected that seawater REE preserved in ancient carbonates are capable of providing information on the impacts of seawater geochemical conditions on the evolution of microbialites.