From the wake of the Marinoan glaciations to the early Cambrian, the global ocean experienced progressive but likely nonuniform and nonlinear oxygenation to levels that, although still low with respect to the modern ocean, and might be therefrom triggered the ecological expansion of animals. In this study, integrated palaeontological and geochemical analyses were conducted on the upper Shuijingtuo Formation (Cambrian Series 2, Stage 3) which outcrops western Yichang City, Hubei Province, South China, in order to assess the influence of oxygen on Cambrian ecosystem diversification in the local environment. To better understand the oxygen fluctuations in the water column over the Yangtze Block and their correlation with the spatial distributions of marine biota during the early Cambrian, three sections representing different environmental settings are investigated: from the carbonate epicontinental platform (Changkan section) to the intra-platform basin (Luojiacun and Qiaojiaping sections). The semi-quantitative analysis shows that the assemblages from the epicontinental platform are dominated by eodiscoid trilobites and brachiopods. Assemblages from the intra-platform basin differ in being dominated by articulated sponges and possible cnidarians, while brachiopods and trilobites are rare. Diagenetic effects on these observed patterns are assessed by SEM-coupled EDS analysis: they indicate that although such effects cannot be definitely discarded, the observed faunal distribution and relative abundance most probably reflect variations in environmental settings. The geochemical analysis (Mo-EF vs. U-EF) furthermore provides evidence of an oxygen gradient from the edge of the platform down to the intra-platform basin. Variations in palaeo-redox conditions between the different studied settings can be observed, which undoubtedly influenced the observed differentiation of benthic communities. Frequent anoxic events in the intra-platform basin were fatal for benthic communities, but dysoxic environments could have favored the persistence and even prosperity of metazoans such as sponges and possible cnidarians that can endure lower dissolved oxygen in the water column than other groups.