Lacustrine carbonate lithofacies in the Hot Spring limestone vary systematically at meter to decameter scales and record paleobathymetry, limnologic conditions, and paleogeographic influences. This unit accumulated during the late Miocene in a lake system in an extensional basin complex, closely associated with lava flows and volcanidastics. Sedimentology and sequence stratigraphy enable understanding and prediction of the occurrence, distribution, and character of lacustrine carbonates. Occurrence of lacustrine carbonates is a function of lake-basin type, in this case a volcanically mediated balanced-filled lake basin that contains various lithofacies: microbialite, grainstone, packstone, wackestone, and carbonate mudstone. Distribution of lithofacies is strongly controlled by depositional sub environment and gradient (through water depth, bottom energy, circulation, and accommodation). Internal character of microbialites (i.e., type, size, porosity, vertical and horizontal permeability, associated lithotypes, diagenesis) is influenced by stratal position (at the parasequence scale) and location along the depositional profile. Depositional reservoir quality characteristics, such as microbialite porosity and thickness, grainstone size and sorting, and overall carbonate continuity and connectivity peak in the medial sublittoral zone. Conversely, secondary diagenetic effects, such as dissolution, carbonate and quartz cement, and possible authigenic clays, are highest in the updip lake-plain littoral zones and are less common lakeward. Thus, the medial sublittoral zone has the optimum potential, where primary depositional characteristics are best developed, and negative secondary diagenetic effects are minimal. These strata share many attributes with the Cretaceous presalt systems of the south Atlantic and can provide insights about controls on potential reservoir character, distribution, and connectivity for exploration and development.