Banded iron formation (BIF) deposition was the likely result of oxidation of ferrous iron in seawater by either oxygenic photosynthesis or iron-dependent anoxygenic photosynthesis-photoferrotrophy. BIF deposition, however, remains enigmatic because the photosynthetic biomass produced during iron oxidation is conspicuously absent from BIFs. We have addressed this enigma through experiments with photosynthetic bacteria and modeling of biogeochemical cycling in the Archean oceans. Our experiments reveal that, in the presence of silica, photoferrotroph cell surfaces repel iron (oxyhydr)oxides. In silica-rich Precambrian seawater, this repulsion would separate biomass from ferric iron and would lead to large-scale deposition of BIFs lean in organic matter. Excess biomass not deposited with BIF would have deposited in coastal sediments, formed organic-rich shales, and fueled microbial methanogenesis. As a result, the deposition of BIFs by photoferrotrophs would have contributed fluxes of methane to the atmosphere and thus helped to stabilize Earth's climate under a dim early Sun.