Abundant iron deposits characterized by stratified orebodies have recently been discovered in the Taxkorgan Terrane, West Kunlun Orogenic Belt, China. Of these deposits, the Zankan iron deposit was the first to be discovered and has the largest estimated tonnage. However, the iron mineralization types for this deposit and others in this area are uncertain, mainly because of the apparent conflict between their typical banded architecture and Cambrian ages. In this study, in situ sulfur isotopic and trace‐element compositions of pyrite, including that in orebodies coexisting with magnetite (Py(o)), pyrite veinlets in strata (Py(v)), and rhyolite and magnetite veins cross‐cutting rhyolite (Py(r)), were conducted to ascertain the genesis of the Zankan deposit. Our results reveal that the pyrite in Zankan deposit has marked positive δ34S values (17.20‰–29.86‰). In addition, Py(o) has low Co/Ni ratios, which are distinct to Py(r) and Py(v), meaning that they belong to typical marine chemical precipitates and magmatic–hydrothermal pyrite, respectively. The coexistence of pyrite and magnetite suggests that the Zankan iron deposit was precipitated in a euxinic basin. Together, our results suggest that seawater sulfate concentrations were low, and the scale and sulfur isotopic compositions of this euxinic basin were most likely dominated by changes in sea level eustacy, which controlled the proportions of seawater and riverine inputs. Comparison with typical Precambrian banded iron formations (BIFs) suggests that the Zankan iron deposit belongs to a unique class of Cambrian BIFs that were controlled predominantly by basins in a shelf environment with locally anoxic conditions.