An early Quaternary shallow submarine hydrothermal iron formation (IF) in the Cape Vani sedimentary basin (CVSB) on Milos Island, Greece, displays banded rhythmicity similar to Precambrian banded iron formation (BIF). Field-wide stratigraphic and biogeochemical reconstructions show two temporal and spatially isolated iron deposits in the CVSB with distinct sedimentological character. Petrographic screening suggests the presence of a photoferrotrophic-like microfossil-rich IF (MFIF), accumulated on a basement consisting of andesites in a ∼ 150m wide basin in the SW margin of the basin. A banded nonfossiliferous IF (NFIF) sits on top of the Mn-rich sandstones at the transition to the renowned Mn-rich formation, capping the NFIF unit. Geochemical data relate the origin of the NFIF to periodic submarine volcanism and water column oxidation of released Fe(II) in conditions predominated by anoxia, similar to the MFIF. Raman spectroscopy pairs hematite-rich grains in the NFIF with relics of a carbonaceous material carrying an average δ¹³C_org signature of ∼ −25‰. A similar δ¹³C_org signature in the MFIF could not be directly coupled to hematite by mineralogy. The NFIF, which postdates large-scale Mn deposition in the CVSB, is composed primarily of amorphous Si (opal-SiO₂ ⋅ nH₂O) while crystalline quartz (SiO₂) predominates the MFIF. An intricate interaction between tectonic processes, changing redox, biological activity, and abiotic Si precipitation are proposed to have collectively formed the unmetamorphosed BIF-type deposits in a shallow submarine volcanic center. Despite the differences in Precambrian ocean–atmosphere chemistry and the present geologic time, these formation mechanisms coincide with those believed to have formed Algoma-type BIFs proximal to active seafloor volcanic centers.