Nodules of anhydrite in Holocene sabkhas of the Arabian Gulf and Baja California have been used as analogues to interpret calcium sulfate nodules in ancient rocks to be of sabkha origin. Nodules and incipient enterolithic veins of gypsum occur in a modern sabkha in Eqypt about halfway between Alexandria and El Alamein, in a depression between a modern and a Pleistocene beach ridge. The displacive gypsum is apparently being precipitated from hypersaline calcium sulfate-saturated interstitial water that increases in salinity as it rises by capillarity from the water table to the surface. Calcium and sulfate ions seem to be derived mainly from dissolution of pre-existing lagoonal gypsum beneath the water table. The nodules occur within a supratidal sand unit of a sabkha sequence capped by a gray, saline soil on which grow clumps of halophytes, separated by salt-encrusted flats. This discovery shows that calcium sulfate nodules can develop (1) within sediments of a region where the climate is almost semiarid rather than very arid, (2) as primary gypsum rather than as anhydrite, and (3) as a consequence of redistribution of calcium sulfate.