Dolomite, despite its thermodynamic stability and abundance in the ancient rock record, is rarely found forming in Holocene environments. This enigma is frequently called the Dolomite Problem. The recent discovery of modern dolomite formation in Lagoa Vermelha, a shallow-water isolated coastal lagoon east of Rio de Janeiro, Brazil, provides a new environment to investigate the factors promoting dolomite precipitation under earth surface conditions. Lagoa Vermelha serves as a natural laboratory in which the dolomite formation process was studied using an integrated hydrologic, geochemical, and sedimentological approach. The results of this study indicate that Ca-dolomite precipitation occurs under anoxic hypersaline conditions within a black sludge layer directly overlying the water/sediment interface. With deposition, the dolomite undergoes an "ageing" process, whereby increased ordering of the crystal structure occurs. Both the initial precipitation and subsequent early diagenesis are strongly mediated by microbial activity. In fact, using sulfate-reducing bacteria cultured from Lagoa Vermelha samples, a highly ordered dolomite has been produced in the laboratory at low temperatures. These experimental results combined with the study of the natural environment mandate that a microbial factor be added to the list of factors capable of causing dolomite precipitation. Considering the Lagoa Vermelha system, we propose a new actualistic model for dolomite formation, which we call the microbial dolomite model.