Taphonomic processes can substantially affect grain composition and textural parameters of carbonate sediment, but can also produce taphonomic signatures that provide supplemental information on the environment of deposition. The aim of the present study is a microtaphofacies analysis of a tidal channel–metahaline lagoon system (North Branch of Pigeon Creek, San Salvador Island, Bahamas). Samples (39 in total) were collected in 13 sites in three zones located along the channel: in the inlet, in the middle part, and in the inner lagoon. Grain composition and taphonomic features—abrasion, boring, calcification, encrustation, fragmentation, and dissolution—were recorded using (1) examination of loose grains belonging to the sand-size fraction, and (2) point counting in thin sections produced from sediment samples. Proportions of different grain types were not correlated in thin sections and loose sediment samples from the same sites, with the exception of algae, which were systematically recorded in thin section in higher proportions. In examination of loose grains, abrasion, fragmentation, and calcification were the most useful taphonomic features, but not in thin sections; only fragmentation rates were correlated between the two proxies. Taphonomic information did not distinguish new facies in surface sediment, but was useful in refining environmental resolution and broadened the interpretation of the environment of deposition. Discrimination between sites based on compositional and textural characteristics of the sediment was improved more by increasing the number of replicates by site than by inclusion of taphonomic data. Application of recognized microtaphofacies to the fossil record is limited, because very little of grain diversity and taphonomic information can be recovered from analysis of thin sections.