We have made estimates of the annual production of fine aragonite mud (< 15mu ) by algae with fragile skeletons from sea floor observations in two areas of modern lime mud accumulation, Florida Bay and the nearshore part of the Florida Reef Tract. Comparing these rates of production with rates of mud accumulation, we calculate that one genus, Penicillus , is a major contributor of fine aragonite mud. Penicillus sp. is one of several lightly calcified green and red algae that disintegrate post-mortem and produce fine crystals (< 15mu ) of aragonite and calcite. The annual contribution of fine aragonite mud from two species of this alga was estimated from a combination of the following observations: (1) a year's surveillance of permanent bottom stations representative of conditions within the major areas of mud accumulation, (2) counts of plant abundance made by divers, and (3) determination of the weight of aragonite per plant for representative specimens. Production of fine aragonite mud (< 15mu ) by Penicillus sp. was compared with average rates of sediment accumulation for the equivalent size grades. The rates of sediment accumulation were determined indirectly from C 14 age determinations of subsurface samples. Considering only production within the areas of maximum mud accumulation , we calculated that since the areas were flooded by rising sea level 4000 to 10,000 years ago, the present rate of production by Penicillus sp. could account for all the fine aragonite mud in the inner Florida Reef Tract and one,third of the same material in northeastern Florida Bay. The production of aragonite mud by Penicillus sp. provides a base line for evaluating the production of other similar algae. In the reef tract and the southeastern and western margins of Florida Bay, two other related green algae together are more abundant than Penicillus sp, in northeastern Florida Bay, one alga is more abundant than Penicillus . Another source of fine lime mud is the biological and mechanical breakdown of resistant skeletons, mollusks, algae, corals, etc. This breakdown gives recognizable skeletal silt (15-62mu ), but appreciable finer particles (< 15mu ) must also be produced. Both organic sources of fine lime mud, fragile algae and skeletal breakdown, are present in abundance in the large wave- and current-swept areas seaward of the mud accumulations. The mud which they generate cannot accumulate in the agitated environment in which it is produced. The mud from one of these "source areas" the one west and southwest of Florida Bay, is very probably a major contributor to the large mud banks in western Florida Bay. The other agitated source area, the outer reef tract, may contribute to the mud accumulation in the nearby inner reef tract, but because the outer reef tract is so close to deeper water, an unknown but significant amount of mud is probably carried seaward to the Straits of Florida and beyond. The production of lime mud by all these skeletal sources is believed to be more than adequate to explain the amount of lime mud sediment in south Florida. The similarity in the conditions of accumulation of these Recent lime muds and many ancient lime muds (textures, structures, and faunal variety) suggests that plant and animal skeletons, particularly the fragile ones, have been major sources of fine lime sediment in the past.