This study describes a sequence of microbialites and volcanics of the Lower Cretaceous Shipu Group, an example of microbialites influenced by volcanic activity. It is located at Shipu town in east Zhejiang Province on the coast of southeast China. Based on macroscopic outcrop observations, microscopic examination of thin sections, electron probe microanalysis (EPMA), field emission scanning electron microscopy (FESEM) imaging analysis, and energy dispersive X-ray spectrometry (EDS) analysis, nine microbialite–tuffite assemblages have been recognized in the section. Their thickness increased gradually upwards as volcanism decreased. There are ooids, bioclastic grains, intraclasts and tuffaceous grains in the grain shoal with local dolomitization. Above the grain shoal, microbial reefs develop either individually or conjoining with adjacent ones, and consist of stromatolites and serpulid tubes with common recrystallization. Tubes of serpulids are calcified and the tube wall is micrite. The tube and intertube parts are filled by sparry calcite. Colonial serpulids are surrounded by microbes to form stromatolites. Black layers of stromatolites contain many calcite crystals with fan-shaped growth patt and preserved organic matter. Microbes are so well preserved in crystal lattices that the original microstructure of the microbes can be clearly observed by FESEM imaging analysis. Microbial reefs develop at a local high point near or above fair-weather wave-base where waves removed fine volcanic ashes. Interreef deposits are coarse tuffite due to physical differentiation. Volcanic activity could provide rich nutrition for microbes, but too much fine volcanic ash inhibits microbial growth. As a result, a moderate supply of volcanic ash favors the development of microbialites.