Banded iron formations (BIFs) are important archives of the ancient oceans, atmosphere, and biosphere, but fundamental questions remain about their origin. It is widely assumed that BIFs were derived from layers of ferric oxyhydroxides and silica that precipitated directly from a water column that was enriched in dissolved iron and silica. The reported lack of current-generated structures and clastic particles beyond mud grade, and the perceived basin-scale extent of laminae, is regarded as evidence for uninterrupted pelagic settling with no sedimentary reworking. New sedimentological and petrographic results show that laminated cherts in the 2.5 Ga Dales Gorge Member of the Brockman Iron Formation, Western Australia, preserve textures indicative of in situ brecciation immediately below the seafloor and the deposition of intraformational sandstones composed of chert clasts in a chert matrix. Chert intraclasts have two sedimentary components: silt-sized microgranules and submicron-sized particles, indicating that the original sediment comprised iron-rich silicate muds that were cemented on or just below the seafloor by pore-filling silica. Silicified muds were episodically eroded by density currents, and the resulting detritus was transported as sand-sized clasts and locally deposited in a matrix of microgranules and mud. Our results support the hypothesis that high concentrations of silica in early Precambrian seawater favored episodic silica cementation of sediments on the seafloor. We suggest that competition between sediment accumulation and seafloor silica cementation, with subsequent differential compaction, explains primary layering in BIFs between beds of relatively thickly laminated chert and beds of thinly laminated, iron-rich minerals. The thickest laminated chert beds are interpreted to represent intervals when seafloor silicification outpaced deposition of hydrothermal muds, forming the equivalent of Phanerozoic hardgrounds at sequence boundaries.