Holocene phosphorite nodules sampled from the sea floor off the coasts of Peru and Chile have been investigated in order to characterize the deposits geochemically and to evaluate their mode of formation. Bulk chemical and mineralogical compositions of the phosphorite nodules reflect varying degrees of dilution of the phosphatic material, fluorapatite, by other authigenic minerals and various allogenic components. Examination with the scanning electron microscope of freshly fractured surfaces of nodules and small pellets separated from associated diatomaceous ooze suggests that the apatite formed authigenically as a direct chemical precipitate rather than by replacement. Surfaces of siliceous biogenic materials as well as some inorganic phases appear to be favored sites for apatite nucleation. The proposed model of phosphorite formation involves inorganic precipitation of apatite within pore waters of anoxic sediments and subsequent concentration of the apatite by physical processes. Oxidation of organic materials (mainly diatoms) during SO 2− 4 reduction is the main source of dissolved phosphate. Apatite precipitation is favored within the sediments by the high phosphate concentration in the interstitial waters, by the availability of suitable nucleation sites, and by diagenetic reactions that remove interfering Mg 2+ ions from the pore solutions. Concentration of apatite into indurated phosphate nodules is brought about by winnowing and reworking processes, possibly in response to a change in the sedimentary environment caused by eustatic sea-level fluctuations or tectonism.