Precambrian banded iron formations record the composition of Earth's atmosphere and hydrosphere during the global rise of oxygen. It has been suggested that the banded texture of these rocks points to fluctuations in ocean chemistry although this remains a subject of debate. Here we show, by petrographic and electron microscopy of Palaeoproterozoic banded iron formations from the Hamersley Province, NW Australia, that not all iron oxide microbands represent primary sedimentary layers. Some iron oxide laminae are derived from abundant hematite particles that were originally encapsulated in chert layers and subsequently liberated by removal of quartz during post-depositional deformation by dissolution-precipitation creep. The liberated hematite particles progressively accumulated in layer-parallel aggregates forming microbands, with new hematite crystals forming via non-classical crystallisation pathways during diagenesis and metamorphism. Therefore, microbands do not necessarily correspond to fluctuations in the depositional environment.