The quest for past Martian life hinges on locating surface formations linked to ancient habitability. While Mars' surface is considered to have become cryogenic ~3.7 Ga, stable subsurface aquifers persisted long after this transition. Their extensive collapse triggered megafloods ~3.4 Ga, and the resulting outflow channel excavation generated voluminous sediment eroded from the highlands. These materials are considered to have extensively covered the northern lowlands. Here, we show evidence that a lacustrine sedimentary residue within Hydraotes Chaos formed due to regional aquifer upwelling and ponding into an interior basin. Unlike the northern lowland counterparts, its sedimentary makeup likely consists of aquifer-expelled materials, offering a potential window into the nature of Mars' subsurface habitability. Furthermore, the lake's residue's estimated age is ~1.1 Ga (~3.2 Ga post-peak aquifer drainage during the Late Hesperian), enhancing the prospects for organic matter preservation. This deposit's inferred fine-grained composition, coupled with the presence of coexisting mud volcanoes and diapirs, suggest that its source aquifer existed within abundant subsurface mudstones, water ice, and evaporites, forming part of the region's extremely ancient (~ 4 Ga) highland stratigraphy. Our numerical models suggest that magmatically induced phase segregation within these materials generated enormous water-filled chambers. The meltwater, originating from varying thermally affected mudstone depths, could have potentially harbored diverse biosignatures, which could have become concentrated within the lake's sedimentary residue. Thus, we propose that Hydraotes Chaos merits priority consideration in future missions aiming to detect Martian biosignatures.
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