Microbialite-dominated carbonate reservoirs of the Lower Cambrian Xiaoerbulake Formation show a huge petroleum exploration potential in the Tarim Basin, NW China. In this study, the sequence stratigraphic framework, sedimentary model and pore-system evolution were constructed to investigate the formation and preservation mechanisms of the age-old microbial carbonate reservoirs. Two 3-order sequences were divided in the Xiaoerbulake Formation. The good reservoirs were mainly developed in the microbial moundsand shallow water shoals of the upper sequence (SQ2). The origin of the microbial carbonate reservoirs is attributed to near-surface freshwater dissolution evidenced by non-fabric selective pores, meteoric cements and slightly negative delta C-13 and delta O-18 values. The facies succession also controls the development and the space texture of the reservoirs. For the preservation of the reservoirs, we argue that the retention diagenesis (early-stage dolomitization and methanogenesis), evaporite-carbonate cycles and relatively stable tectonic settings are important for pore maintenance during long-term burial.