Ambient inclusion trails (AITs) are microtubular structures on various substrates that have occurred widely through the geologic record. They are thought to be generated by the migration of inclusion grains (pyrite, magnetite, carbonaceous spherules), termed ″terminal propelled grains″, through a substrate driven by pressure solution from the in situ thermal decomposition of organic matter. AITs have been reported frequently from Archean rocks, and also commonly occurring with phosphatized fossils through late Neoproterozoic and Cambrian. During this timeframe, bioturbation was also becoming more intense, and some analogous, AIT-like structures may be more appropriately interpreted as endolithic micro-organisms or borings of predatory animals. It is thus crucial to reduce potential ambiguity between these types of structures, and provide keys for distinguishing AITs and real biogenic structures. From the Early Cambrian Kuanchuanpu Fm. in Xixiang, Southern Shaanxi, China, numerous microfossils hosting AITs were collected and examined, with recognition of two types of co-occurring micro-borings in addition to AITs. Type 1 micro-boring structures appear as long, unbranched, cylindrical filaments with isodiametric spheroidal expansions on the surface of steinkerns or moulds of small shelly fossils (SSFs); these structures correlate well with casts of known endolithic cyanobacterial fossils, Endoconchia lata . Type 2 micro-boring structures are comprised of dense networks of microborings and microtunnels on the phosphatized fossil materials, and are interpreted as trace fossils of endolithic fungi. Such a co-occurrence enables us to make direct comparisons between the variations in microtubular structures. We have made detailed observations of their morphological and taphonomic features, which collectively reveal that they are substantially different in both formation and mechanism of preservation. In the initial stage of formation of Type 1 structures, E. lata bored within the original calcite shells of SSFs, with the resulting borings preserved as phosphatic casts during phosphatization. Type 2 structures were caused by infestation of endolithic fungi on the phosphatized fossils while there were still much residual organic materials available for their probably heterotrophic life mode, leaving dense traces of boring behavior. With deeper burial and occurring later in the taphonomic sequence, thermal decomposition of the surrounding organic remains released gases that propelled small inclusions to move through the substrates, forming AIT tunnels. Some peculiar spherical grains preserved in the distal ends of AITs have been discovered and examined with Laser-Raman and EDS mapping. These data revealed that organic carbon is their major component. The intact spherical profiles without evidence of compression in their tunnel-facing backsides, and the perfect fit of the grain margins and AIT outlines suggest that these carbonaceous grains may have themselves been responsible for AIT formation rather than passive accumulation or secondary filling. Such rare carbonaceous terminal propelled grains of AITs not only explains the morphological diversity (rounded cross sections) of AIT tunnels, but also provide us with a new approach to investigate the taphonomic environment of the fossil-enriched strata. Raman geothermometry of these carbonaceous materials indicates that the Kuanchuanpu Fm. in this area underwent very low-grade metamorphism, with a peak metamorphic temperature estimated at 232–261°C. This implies that the fossils are mostly free from metamorphic overprints, and roughly constrains the upper limits of AIT formation. In general, as indirectly biogenic structures, the distribution of AITs is random and shows no preference for fossil taxonomy and no particular pattern. However, for those AITs that occurred on protoconodonts, there is an intriguing distribution pattern that AITs traveled around the outskirts of protoconodont spines, forming distinctive spiral grooves. Such a phenomenon may provide auxiliary evidence of their original composition by the following interpretations. The half-open grooves indicate the original composition of protoconodont spines were relatively soft material as opposed to hard bioapatite. The polygonal cross sections suggest, in this case, that the propelled grains were euhedral pyrite crystals, which were usually resulted by the decomposition of more recalcitrant organic materials. Our interpretation is that euhedral pyrite crystals moved from inside of the spines and were trapped by surrounding hard substrate, forming spiral grooves on the fossil-sediment interface. Our observations are consistent with the hypothesis that the original composition of the protoconodont spines are mainly organic, such as chitin, with secondary phosphatization—this hypothesis presents a more favorable scenario for the observed morphologies of the AITs formed by migration of euhedral pyrite crystals through a relatively soft substrate.