Recent interest in Mg-rich silicate formation stems from its role as a valuable palaeoclimatic indicator in fluvio-lacustrine environments and its insights into metal geochemical cycling. Traditionally, Mg-silicate genesis in lacustrine contexts is linked to alkaline or saline conditions in closed, evaporitic basins. However, the discovery of interparticle amorphous kerolite-like Mg-silicates in the sediments of Lake Clifton, a currently hypersaline coastal lagoon in Western Australia with circumneutral pH and moderate alkalinity, challenges existing models. In this study, petrographic, hydrochemical and microbial genomic data from different Lake Clifton sub-environments (episodically submerged and subaerial settings) and substrates (pustular microbial mats and non-lithifying microbial sediments) were integrated with geochemical modelling to quantify the mechanisms underlying the formation of Mg-silicates and aragonite peloids as lake shoreline sediments. Geochemical modelling suggests that neither evaporation-driven alkalinity fluctuations nor the mixing of lake water with groundwater can solely explain the kerolite-like/carbonate association observed in lakebed sediments. Kerolite-like phases nucleate in association with twisted microbial extracellular polymeric substances and organic-rich bacterial remains; this, combined with the identification of diatom and cyanobacteria-powered photosynthesis, putative anoxygenic photosynthesis and sulphate-reducing metabolisms, suggests an intimate link between biologically induced processes and the co-precipitation of aragonite peloids and interparticle kerolite-like phases in the lake. Moreover, the contribution of dead diatom frustule dissolution towards kerolite-like authigenesis was geochemically simulated, revealing that the precipitation of observable amounts of kerolite-like at pH values measured in Lake Clifton waters would prevent the formation of aragonite, questioning the feasibility of a scenario dominated by large inputs of dissolved biogenic silica. The discovery of kerolite-like Mg-silicates in microbial-bearing sediments of a hypersaline coastal lagoon prompts a holistic re-evaluation of the environmental and microbiological factors influencing Mg-silicate–carbonate co-precipitation in lacustrine-peri-marine settings. Studying modern Mg-silicate-bearing lacustrine sediments offers the opportunity to better understand the early diagenetic biotic-abiotic processes that may have had limited petrographic preservation potential in ancient saline lake deposits.