The Khatyspyt Lagerstätte (~544 Ma, Russia) provides a valuable window into late Ediacaran Avalon-type ecosystems with rangeomorphs, arboreomorphs, and mega-algae. Here, we tackle the geobiology of this Lagerstätte by the combined analysis of paleontological features, sedimentary facies, and lipid biomarkers. The Khatyspyt Formation was deposited in carbonate ramp environments. Organic matter (0.12–2.22 wt.% TOC) displays characteristic Ediacaran biomarker features (e.g., eukaryotic steranes dominated by the C29 stigmastane). Some samples contain a putative 2-methylgammacerane that was likely sourced by ciliates and/or bacteria. 24-isopropylcholestane and 26-methylstigmastane are consistently scarce (≤0.4% and ≤0.2% of ∑C27-30 regular steranes, respectively). Thus, Avalon-type organisms occupied different niches than organisms capable of directly synthesizing C30 sterane precursors among their major lipids. Relative abundances of eukaryotic steranes and bacterial hopanes (sterane/hopane ratios = 0.07–0.30) demonstrate oligotrophic and bacterially dominated marine environments, similar to findings from other successions with Ediacara-type fossils. Ediacara-type fossils occur in facies characterized by microbial mats and biomarkers indicative for a stratified marine environment with normal–moderate salinities (moderate–high gammacerane index of 2.3–5.7; low C35 homohopane index of 0.1–0.2). Mega-algae, in contrast, are abundant in facies that almost entirely consist of allochthonous event layers. Biomarkers in these samples indicate a non-stratified marine environment and normal salinities (low gammacerane index of 0.6–0.8; low C35 homohopane index of 0.1). Vertical burrowers occur in similar facies but with biomarker evidence for stratification in the water column or around the seafloor (high gammacerane index of 5.6). Thus, the distribution of macro-organisms and burrowers was controlled by various, dynamically changing environmental factors. It appears likely that dynamic settings like the Khatyspyt Lagerstätte provided metabolic challenges for sustenance and growth which primed eukaryotic organisms to cope with changing environmental habitats, allowing for a later diversification and expansion of complex macroscopic life in the marine realm.