ABSTRACTWe have reconstructed the depositional environment of the gypsum‐carbonate‐shale sequence that comprises the Upper Permian Bellerophon Formation of the southeastern Alps in northern Italy. This formation, which reaches a maximum thickness of 600 m, is roughly divided into two facies: (a) a lower dolomite‐gypsum facies, and (2) an upper micritic‐skeletal limestone facies. It directly overlies, with transitional contact, a thick red‐bed sequence (alluvial fanglomerates, fluviatile sandstones and flood‐plain siltstones) and is sharply overlain by Lower Triassic calcarenites (oolites, grapestones, pellets, flat‐pebble conglomerates).The lower evaporite facies rocks are found in well‐defined cycles, each of which, from bottom to top, consists of (A) thin‐bedded, worm‐burrowed, vuggy ‘earthy’ micritic dolomite, (B) massive to poorly laminated dark grey to black sandy dolomite carrying isolated gypsum nodules, (C) layered (thin‐bedded) nodular gypsum (commonly with ‘enterolithic’ folds) with fragmented partings of dolomite, and (D) massive ‘chicken‐wire’ nodular gypsum. At Passo di Valles, just east of Predazzo, and 50 km from the basin margin, we measured forty‐six consecutive complete cycles, with an average thickness of 3 m per cycle.We interpret the cyclic sequence as having been deposited in a prograding shallow lagoon—sabkha complex. The worm‐burrowed ‘earthy’ dolomite mud accumulated in a shallow hypersaline subtidal lagoon. The black sandy dolomite was an ‘intertidal’ sand‐flat devoid of algal mats and constantly churned by burrowers (likely crustaceans). As the shoreline prograded lagoonward evaporative concentration of the groundwater induced diagenetic growth of anhydrite nodules (now gypsum) within the porous sandy dolomite. The layered nodular and ‘chicken‐wire’ gypsum of the cycle cap is an extreme product of such displacive intra‐sediment growth of anhydrite (now gypsum) above the water table of a completely exposed sabkha, such as is found in the Persian Gulf today.We have observed the same cyclically arranged lithologies in two other evaporite sequences in Italy: the Triassic Raibl Formation of the Southern Alps and the Upper Triassic Burano Formation of the central Apennines. We suggest that this mode of deposition is likely a very common one for