The absence of unambiguous animal body fossils in rocks older than the late Ediacaran has rendered fossil lipids the most promising tracers of early organismic complexity. Yet much debate surrounds the various potential biological sources of putative metazoan steroids found in Precambrian rocks. Here we show that 26-methylated steranes-hydrocarbon structures currently attributed to the earliest animals-can form via geological alteration of common algal sterols, which carries important implications for palaeo-ecological interpretations and inhibits the use of such unconventional 'sponge' steranes for reconstructing early animal evolution.