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The Emu Bay Shale (EBS) of South Australia is anomalous among Cambrian Lagerstätten because it captures anatomical information that is rare in Burgess Shale–type fossils, and because of its inferred nearshore setting, the nature of which has remained controversial. Intensive study, combining outcrop and borehole data with a compilation of >25,000 fossil specimens, reveals that the EBS biota inhabited a fan delta complex within a tectonically active basin. Preservation of soft-bodied organisms in this setting is unexpected and further underscores differences between the EBS and other Cambrian Lagerstätten. Environmental conditions, including oxygen fluctuations, slope instability, high suspended sediment concentrations, and episodic high-energy events, inhibited colonization of the lower prodelta by all but a few specialist species but favored downslope transportation and preservation of other largely endemic, shallow-water benthos. The EBS provides extraordinary insight into early Cambrian animal diversity from Gondwana. These results demonstrate how environmental factors determined community composition and provide a framework for understanding this unique Konservat-Lagerstätte.