The uppermost Middle Triassic Leikoupo Formation in the western Sichuan Basin of China has recently been shown to host as much as 5.3 tcf (1.5 × 1012 m3) of natural gas resources. The reservoir rocks, composed mainly of microbially derived dolomudstone (e.g., thrombolites and stromatolites), are characterized by low porosity (<8%) and permeability (<0.001 to 10 md). The limestone is commonly tight and not of reservoir quality because of abundant meteoric calcite cementation, whereas the dolostone has various types of pores dominated by solution-enlarged pores and vugs, microbial framework pores, and micropores. Breccias are well developed in places, probably because of dissolution of underlying evaporites (e.g., anhydrite) by an influx of low-salinity fluids (e.g., freshwater and seawater) during an early burial stage. Early dolomitization created micropores in the dolomudstone, and subsequent diagenetic events were dominated by calcite, dolomite, quartz cementation, pyrite replacement, compaction, fracturing, and development of stylolites. Localized hydrothermal activity has been evidenced by high homogenization temperatures (∼160°C–200°C) obtained from fluid inclusions in fracture-filling cements. Bacterial sulfate reduction probably resulted in H2S generation, pyrite precipitation, and solution-enlarged pore and vug formation, whereas part of the current H2S in these reservoirs may have been sourced from thermochemical sulfate reduction or an underlying formation (e.g., the Feixiangguan Formation). Development of microfractures and associated micropores was probably the final diagenetic event, which improved pore interconnectivity. This study confirms the effect of diagenesis on the development of a microbial dolomudstone reservoir, which may be applicable to other similar microbial carbonate reservoirs elsewhere, for example, Middle Triassic sections of the Tethys region and offshore Brazil.