Rhodoliths (free-living coralline red algae) can thrive under a wide range of temperatures, reduced light, and increased nutrient levels, and often form a distinct so-called rhodalgal lithofacies that is an important component of Cenozoic shallow-water carbonates. Global distributions illustrate that from the late-early to early-late Miocene (Burdigalian–early Tortonian), rhodalgal facies reached peak abundances and commonly replaced coral-reef environments, accompanied by a decline in other carbonate-producing phototrophs. We argue that the dominance of red algae over coral reefs was triggered in the Burdigalian by enhanced trophic resources associated with a global increase in productivity, as evidenced by a long-term shift toward higher carbon isotope values. Rhodalgal lithofacies expanded further in the middle Miocene when strengthened thermal gradients associated with the establishment of the East Antarctic Ice Sheet led to enhanced upwelling while climate change generated increased weathering rates, introducing land-derived nutrients into the oceans. Globally cooler temperatures following a climatic optimum in the early-middle Miocene contributed to sustain the dominance of red algae and prevented the recovery of coral reefs. The global shift in nearshore shallow-water carbonate producers to groups tolerant of higher levels of trophic resources provides further evidence for increased nutrient levels during that time interval and shows the sensitivity of shallow-water carbonate facies as indicators of past oceanographic conditions.