Problematic microfossils dominate the palaeontological record between the Great Oxidation Event 2.4 billion years ago (Ga) and the last Palaeoproterozoic iron formations, deposited 500-600 million years later. These fossils are often associated with iron-rich sedimentary rocks, but their affinities, metabolism, and, hence, their contributions to Earth surface oxidation and Fe deposition remain unknown. Here we show that specific microfossil populations of the 1.88 Ga Gunflint Iron Formation contain Fe-silicate and Fe-carbonate nanocrystal concentrations in cell interiors. Fe minerals are absent in/on all organically preserved cell walls. These features are consistent with in vivo intracellular Fe biomineralization, with subsequent in situ recrystallization, but contrast with known patterns of post-mortem Fe mineralization. The Gunflint populations that display relatively large cells (thick-walled spheres, filament-forming rods) and intra-microfossil Fe minerals are consistent with oxygenic photosynthesizers but not with other Fe-mineralizing microorganisms studied so far. Fe biomineralization may have protected oxygenic photosynthesizers against Fe2+ toxicity during the Palaeoproterozoic.