Lime mud in northern Belize lagoon is composed predominantly of silt-size cryptocrystalline grains and clay-size clumps, both of which consist of anhedral, equant crystals less than 0.5 mu m in size. This mud is 70-90% Mg-calcite containing 9-10 mole % MgCO 3 . Detailed petrographic, morphologic and mineralogic analyses suggest that the cryptocrystalline grains are micritized skeletal grains and that the mud formed by abrasion and bioerosion of these altered grains. Micritization of skeletal grains occurred primarily by recrystallization of original skeletal carbonate (laths, prisms and blades of Mg-calcite, aragonite and calcite) to equant crystals of micritic Mg-calcite, with additional alteration by micritic infilling of microborings and skeletal cavities. Because of differences between crystal morphologies and mineralogies of original skeletal components and their micritized counterparts, mud produced by diminution of micritized grains is distinct from that produced by skeletal breakdown. The abundance of cryptocrystalline grains in the Bahamas and other shallow carbonate environments suggests that micritized grains are potentially an important source of lime mud that has not previously been identified.