Abstract The Upper Freeport Formation (Upper Allegheny Group, Middle Pennsylvanian) is one of the earliest nonmarine cyclothems in the Appalachian Basin and contains carbonates, siliciclastics, and coal. A detailed facies analysis of 25 limestone cores, along with detailed subsurface data from the Upper Freeport Formation in western Pennsylvania (Armstrong and Indiana counties), identified a large lacustrine/alluvial complex. The complex was drained by an anastomosed fluvial system containing a mosaic of subenvironments including extensive wetlands, densely vegetated swamp areas, and freshwater, carbonate-producing lakes. These lakes were small in size (several square kilometers), shallow, stratified, and connected by surface and groundwaters. Carbonate production was not triggered by evaporative concentration but by biogenic algal production in a sediment-starved system. Carbonates were continually being recycled, both physico-chemically and biologically. Siliciclastic wedges and predominance of reworked and traction-deposited carbonates favor a current-dominated, open lacustrine environment. Small-scale lake-level changes may have been controlled by climatic or depositional dynamics of the river system. The northern Appalachian Basin was an active foreland basin situated in the wet equatorial zone during Allegheny time. Through the use of modern analogs for carbonate lacustrine systems, as well as for anastomosed river systems, a model for the generation of nonmarine sequences within cyclothems was proposed. Tectonics (subsidence) may have been the driving force that controlled river drainage patterns. The evolution from an anastomosed to a single-channel system between tectonic pulses produced a mosaic of subenvironments that culminated in soil and swamp formation. This culmination explains the great lateral continuity of coal and underclay deposits. The low depositional gradient and unique combination of climate, tectonics, and eustatic level simply created a place where lake sediments and plant material could collect for a limited period of time.