Microbialites, often considered as a signal of extreme marine environment, are common in the Lower Triassic strata of South China where they flourished in the aftermath of the end-Permian mass extinction. Early Triassic microbialite facies are known to vary palaeogeographically, perhaps due to differing climates, ocean chemistry, and water depths. This paper provides the first record of a brief, but spectacular development of microbialites in the aftermath of the end-Permian mass extinction at Panjiazhuang section, Changxing Region of Zhejiang Province (eastern South China). Here, the Upper Permian Changxing Formation comprises typical shallow platform facies rich in calcareous algae and foraminifera, the development of which was terminated by the major end-Permian regression. A 3.4-m-thick microbialite began to form at the onset of the transgression in the earliest Triassic. The microbialite at Panjiazhuang section is composed of thrombolite that contains abundant calcified cyanobacteria, small gastropods, microconchid tubes and ostracods, representing a low-diversity shallow marine community in the aftermath of the end-Permian crisis. The microbialites are succeeded by thin-bedded micrites bearing thin-shelled bivalves, which record a rapid sea-level rise in the Early Triassic. Abundant populations of small pyrite framboids are observed in the upper part of the microbialites and the overlying thin-bedded micrites, suggesting that dysoxic water conditions developed at that time. The appearance of microbialites near the Permian–Triassic boundary (PTB) at Panjiazhuang section was the result of peculiar marine conditions following the end-Permian regression, whilst their disappearance was due to the increasing water depth and the development of dysoxia.