The 7 m deep Bight of Abaco, 80 x 35 km in size, is a semirestricted marine lagoon on Little Bahama Bank. A community of Thalassia and calcareous green algae grows on and contributes to a 2 m thick sediment carpet of calcareous muddy sand, which is accumulating at a net rate of 120 mm/10 3 yrs. Measurements of suspended sediment concentrations yield an estimate of a total off-bank sediment loss of 172 x 10 10 kg. A budget is prepared which compares total algal carbonate production with sediments of possible algal derivation now in the basin. Sediment thickness was determined by probing. Density, mineralogy, grain composition and texture were determined from grab samples and cores. Laboratory experiments on the breakdown of calcareous algae reveal that products include sand from Halimeda plus material less than 62 mu m for all algae. The standing crop of the mud producers Penicillus, Rhipocephalus , and Halimeda averages 22 plants/m 2 and is highest in the winter. Calcification ranges from 45 to 64 percent dry weight depending upon the species. Work by others indicates a growth rate for Penicillus of 6 to 12 crops per year. Radiocarbon ages indicate that marine conditions similar to the present have prevailed for 5,500 years. Results reveal that calcareous green algae have produced 1.5 to 3 times the mass of aragonite mud and Halimeda sand now in the basin. Thus it is concluded that the study area, a typical interior Bahama Bank lagoon, produces much more sediment by calcareous green algae alone than can be accommodated on the bank tops.