The onset of the Cambrian witnessed the diversification of “small shelly fossils (SSF)”, which affected carbonate depositional system. One of the problematic SSF, chancelloriids, are common components of the early to middle Cambrian carbonate and shale, and their contributions toward Cambrian carbonates are not yet fully understood. This study assesses distribution patterns of chancelloriid sclerites in the Cambrian Series 3 Daegi Formation based on microfacies analysis and discusses their sedimentologic implications. In the lower part of the formation, partially articulated chancelloriid sclerites occur mainly in bioclastic packstone and grainstone facies, with isolated sclerite rays in nodular packstone to grainstone facies. In the middle part of the formation, chancelloriid fragments occur only sporadically in bioclastic wackestone to packstone, bioclastic grainstone and oolitic packstone to grainstone facies, whereas boundstone facies are nearly devoid of their fragments. There are no chancelloriid fragments in the upper part of the formation, which consists of oolitic packstone to grainstone facies. Chancelloriids are interpreted to have primarily occupied platform margin shoal environments, shedding their sclerites to surrounding areas, and thus contributed as sediment producers. The distribution of Daegi chancelloriid sclerites is similar to other Cambrian examples, with the exception of common chancelloriids in Cambrian Series 2 reefs and their apparent near absence in the Daegi and other Cambrian Series 3 reefs. This disparity resulted from changes in the ecologic niche of chancelloriids after the end-Cambrian Series 2 reef crisis, coupled with an overall decline of chancelloriids in the middle Cambrian.