Member 3 of the Dalradian Bonahaven Formation of Islay comprises mixed dolomitic-siliciclastic sediments assignable to three facies, all deposited under very shallow marine conditions. The layered facies consists of a centimeter-scale alternation of dolomitic, fine-to-medium-grained sandstones and silty dolomicrites, often containing terrigenous clay. Each sand layer was deposited by one storm event. Sedimentary features of the facies include lenticular and graded bedding, wave-generated ripple-lamination and form-sets (wave fetch being in excess of 100 km), horizons of dolostone conglomerate, synaeresis cracks, load structures, and irregularly-topped dolostone layers (sometimes associated with pockets of dolostone flake breccia) representing the products of scour (and desiccation). There is no strong evidence that evaporites were ever present. Sub-facies are recognizable, dominated by lenticular/graded bedding, or ripple lamination, or characterized by occurrences of flake pockets. Deposition was almost entirely sub-aqueous in a 'lagoonal' area suffering varying salinities. The sandstone facies consists of cross-stratified medium-grained sandstones (with occasional ooids) and pure dolostone layers which are often dissected by desiccation cracks or represented only by horizons of dolostone pebbles. Deposition was from tidal currents on a tidal sand flat; paleocurrents are radial overall, but bimodal or multimodal in individual beds. The stromatolite facies is represented both by bioherms within the sandstone and layered facies, and by biostromes. Evidence of early calcification is preserved. A lamination expressed as alternations of fine-grained dolomite and coarser dolomite with siliciclastic detritus could represent seasonal changes in algal mat composition. The fine crystal size of the dolomite and ubiquity of dolomitization within a sharply defined stratigraphic interval (= member 3) suggest that the dolomite is a penecontemporaneous replacement. Algae may have been important in this and other Precambrian dolostones, but evidence of their direct involvement is present only in the stromatolite horizons. The relatively high content of Fe and Mn in the dolomite is not incompatible with a penecontemporaneous origin and is thought to be due to a build-up of these elements in the coastal zone during deposition. The member 3 environment is postulated to have been bounded seaward by an ooid shoal resulting in a semi-restricted environment with fluctuating salinities which assisted in dolomite formation. Most layered facies sediments formed in permanently submerged areas disturbed only by storms while sandstone facies strata were generated in shallow areas where the configuration of the bottom topography led to the development of relatively strong tidal currents. The facies form a patchwork in which there is no consistent relationship between depth and position from the shoreline. Geographic changes (probably induced by fault movements) led to vertical oscillations between facies, but no cyclic sequences are present.