Organically preserved, unicellular microfossils of Ediacaran and Cambrian age, which comprise single and multiple internal bodies within the vesicle, have been studied with a view towards explaining the origin and function of these structures. Assessed by body plan, ornamentation, excystment structure, cell wall resistance and ultrastructure (where available), and newly observed internal bodies defined by their own, robust wall, these microfossils are recognised as algal zygotic cysts and phycomata by comparison with extant green algae. Although rare, these internal bodies are a persistent feature of specific morphotypes regardless of geological age, and are reviewed. Internal bodies are a part of reproductive cysts, resembling those known in different clades of green algae: prasinophytes, chlorophytes and streptophytes, as well as alveolates (including dinoflagellates). They are inferred to be endocysts containing zygotes and/or sacs of swarmers, if single, or offspring cells (spores), if multiple, in sexual and asexual generations of ancient taxa of the classes Prasinophyceae and Chlorophyceae. It may not be excluded, however, that they represent the earliest, stem-group streptophytes or alveolates. The diagnoses of the Ediacaran taxa Ancorosphaeridium, A. magnum, Densisphaera, D. arista, D. fistulosa, Multifronsphaeridium ramosum and Tanarium tuberosum are emended to include the internal bodies as integral morphological structures of microfossils, and to abandon the erroneous identification of the double wall of the vesicle. Based on the earliest occurrence of microfossils with an internal body in the Dictyosphaera—Shuiyousphaeridium plexus, sexual reproduction among photosynthesising microbiota is interpreted at c. 1.6–1.4 Ga, a common phenomenon in the Ediacaran (Tanarium, Ancorosphaeridium, Densisphaera), and dominant in the Cambrian (Skiagia, Polygonium and many others) periods.