In situ phosphatization and reductive cell division have recently been discovered within the vacuolate sulphur-oxidizing bacteria. Here we show that certain Neoproterozoic Doushantuo Formation (about 600 million years bp) microfossils, including structures previously interpreted as the oldest known metazoan eggs and embryos, can be interpreted as giant vacuolate sulphur bacteria. Sulphur bacteria of the genus Thiomargarita have sizes and morphologies similar to those of many Doushantuo microfossils, including symmetrical cell clusters that result from multiple stages of reductive division in three planes. We also propose that Doushantuo phosphorite precipitation was mediated by these bacteria, as shown in modern Thiomargarita-associated phosphogenic sites, thus providing the taphonomic conditions that preserved other fossils known from the Doushantuo Formation.