The origin of oxidized iron in Precambrian iron formations has been debated for decades. Direct paleontological evidence for a microbial role in iron oxidation has been sought in the biosignatures in these structures. This study documents how several biosignatures of phototrophic iron-oxidizing communities form in modern hydrothermal iron deposits. The microbes, primary minerals, microfossils, and stromatolitic biofabrics from Chocolate Pots hot springs in Yellowstone National Park were characterized across a range of spatial scales via various types of microscopy, X-ray diffraction, energy dispersive spectroscopy, and total organic carbon elemental analyses. Electron microscopic examination of the cyanobacterial mats reveals the formation of distinct dendritic-like biofabrics. Early-stage iron-permineralized phototrophic microfossils display taxonomic features that allow identification to the genus level. Selected-area electron diffraction analysis indicates that cells were permineralized by iron oxides (2-line ferrihydrite). Although permineralization by silica is considered to result in fossils with the highest cellular fidelity, this investigation suggests that iron permineralization may also produce exceptionally well-preserved microfossils. Characterization of biosignatures in this modern high-iron thermal spring provides a unique opportunity to establish a link between (1) our previous physiological measurements of iron oxidation by a phototrophic community; (2) production of biosignatures by the community; and (3) survival of these biosignatures during the earliest stages of diagenesis in the iron oxides underneath the microbial mats. This fossil evidence linking taxonomy, physiology, and biosignatures may be used to infer the paleobiology and paleoecology of similar fossil benthic microbial communities and may provide a means to assess the microbial contribution to ancient iron deposits.