Modern microbialites are often located within groundwater discharge zones, yet the role of groundwater in microbialite accretion has yet to be resolved. To understand relationships between groundwater, microbialites, and associated microbial communities, we quantified and characterized groundwater flow and chemistry in active thrombolitic microbialites in Lake Clifton, Western Australia, and compared these observations to inactive thrombolites and lakebed sediments. Groundwater flows upward through an interconnected network of pores within the microstructure of active thrombolites, discharging directly from thrombolite heads into the lake. This upwelling groundwater is fresher than lake water and is hypothesized to support microbial mat growth by reducing salinity and providing limiting nutrients in an osmotically stressful and oligotrophic habitat. This is in contrast to inactive thrombolites that show no evidence of microbial mat colonization and are infiltrated by hypersaline lake water. Groundwater discharge through active thrombolites contrasts with the surrounding lakebed, where hypersaline lake water flows downward through sandy sediments at very low rates. Based on an appreciation for the role of microorganisms in thrombolite accretion, our findings suggest conditions favorable to thrombolite formation still exist in certain locations of Lake Clifton despite increasing lake water salinity. This study is the first to characterize groundwater flow rates, paths, and chemistry within a microbialite‐forming environment and provides new insight into how groundwater can support microbial mats believed to contribute to microbialite formation in modern and ancient environments.