Ferruginous conditions prevailed in the world’s deep oceans during the Archean and Proterozoic Eons. Sedimentary iron formations deposited at that time may provide an important record of environmental conditions, yet linking the chemistry and mineralogy of these sedimentary rocks to depositional conditions remains a challenge due to a dearth of information about the processes by which minerals form in analogous modern environments. We identified siderites in ferruginous Lake Towuti, Indonesia, which we characterized using high-resolution microscopic and spectroscopic imaging combined with microchemical and geochemical analyses. We infer early diagenetic growth of siderite crystals as a response to sedimentary organic carbon degradation and the accumulation of dissolved inorganic carbon in pore waters. We suggest that siderite formation proceeds through syntaxial growth on preexisting siderite crystals, or possibly through aging of precursor carbonate green rust. Crystal growth ultimately leads to spar-sized (>50 μm) mosaic single siderite crystals that form twins, bundles, and spheroidal aggregates during burial. Early-formed carbonate was detectable through microchemical zonation and the possible presence of residual phases trapped in siderite interstices. This suggests that such microchemical zonation and mineral inclusions may be used to infer siderite growth histories in ancient sedimentary rocks including sedimentary iron formations.