Early Cambrian acritarchs from the Lükati Formation of Estonia are described, based on new material, and their biological affinities reviewed. The phenotypical variants and the inferred function of their vesicles are indicative for recognising zygotic/resting cysts and vegetative cells. They represent the Chlorophytes in the class Prasinophyceae, which reproduce asexually (forming resting phycoma cysts), and Chlorophyceae, which reproduce sexually (zygotic cysts). Some species had a complex life cycle, with alternating vegetative and reproductive generations that differed morphologically. Based on acritarch records from the Baltica palaeocontinent, of which the Lükati Formation assemblage is a part, and the global PhytoPal Taxonomic Database (PhytoPal Project, Leverhulme Trust, Leicester University, 2003–2006), the early Cambrian diversification of phytoplankton is reviewed. The initial Cambrian diversification, and a recovery after the end-Ediacaran extinction, was rapid and exhibited a stepwise pattern of radiation episodes covering short intervals equivalent to biochrons lasting a few million years, estimated from the numerical ages of the strata containing them and the current time scale of the early Cambrian. However, the first appearance datum (FAD) of new species within the biozones/biochrons appears in a succession rather than at one stratigraphical level, indicating true biological speciations. The only genera surviving from the Proterozoic Eon are Leiosphaeridia, Tasmanites, Pterospermella and Pterospermopsimorpha; these are Lazarus genera radiating new species in the early Cambrian. All other Cambrian genera and species are new, morphologically innovative, and much smaller.