Soft-sediment deformation structures, like convolute lamination and pseudonodules, are common in deep-marine turbidites, but details of their origin and timing of formation remain a source of debate. Deep-marine basin-floor deposits of the Neoproterozoic Upper Kaza Group (Windermere Supergroup) crop out superbly in the Castle Creek study area and provide an ideal laboratory to investigate these aspects in convolute-laminated pseudonodules, and also how that deformation influenced later diagenesis. Pseudonodules consist of well-sorted, matrix-poor, upper medium- to coarse-grained, planar-stratified or cross-stratified sandstone that are underlain and overlain by comparatively more poorly sorted, matrix-rich, graded sandstone of similar grain size. Deposition of the stratified pseudonodules is interpreted to have occurred during the same event that deposited the graded sandstone, albeit during a period of general transport bypass, whereby isolated, shallow, seafloor depressions became filled with well-sorted, stratified sand. As stratified sand accumulated the depressions slowly subsided until a critical thickness had built up and exceeded the load-bearing capacity of the substrate composed of graded sand. This destabilized the surface separating the two layers and resulted in the stratified unit foundering, and in some cases becoming completely enveloped by, the upward-displaced lower-density substrate. Surprisingly, despite the deformed macroscopic character of the stratified sediment, primary grain fabric, including intergranular porosity up to 40%, was preserved and influenced early diagenesis, which, owing to dispersed phosphate cement and depleted carbon isotope composition of the pervasive carbonate cement, would have begun very near the sediment–water interface. Importantly also, pseudonodules are common in basin-floor deposits but comparatively rare in continental-slope strata. Expanding flow conditions over the basin floor would have promoted grain settling, and in turn development of a more stably (density) stratified flow structure. Ultimately this resulted in higher local rates of sedimentation on the basin floor and the accumulation of a substrate more prone to later liquidization.