Silica-phosphatic nodules are abundant in black shales of the Yanjiahe Formation in the Three Gorges Area of South China, which is correlated to the Fortunian Stage, Terreneuvian Series, Cambrian System. The nodules are rich in small shelly fossils and hence attract the attention of numerous paleontologists and sedimentary geologists. However, the genesis of the nodules and the preservation of the small shelly fossils are poorly understood. Here we analyze morphological, structural, mineralogical and chemical features of the nodules in multiscale using a combination of micro-X-ray fluorescence spectroscopy, X-ray diffraction, scanning electron microscopy and confocal laser Raman spectroscopy. Results reveal that nodules are concentric in chemical and mineralogical compositions, comprising a silica-phosphatic core encrusted sequentially by a phosphatic zone, a siliceous zone and a very thin pyrite outer rim. The black shales hosting the nodules demonstrate a laminated texture of alternating clayey and silty laminae, which were respectively deposited in sulfidic/less sulfidic, high/low production, intense/weak chemical weathering conditions. The phosphogenesis of the nodules resulted in the phosphatization of small shelly fossils, which prevented the fossils from being dissolved during diagenesis, whereas the silica encrustation sealed the fossils within the nodules and thus protected the fossils from alteration by deep burial and surface weathering.