The tiny animals that constructed the reef, known as Cloudina, evolved from soft-bodied ancestors.
Scientists at Edinburgh University found that the creatures attached themselves to fixed surfaces and each other using a natural cement made from calcium carbonate.
They may have developed their reef-building ability to protect themselves against increased threats from predators. Reefs also provided access to nutrient-rich currents at a time of growing competition for food and living space.
The development of hard biological structures sparked a dramatic increase in the biodiversity of ocean ecosystems. Professor Rachel Wood, who led the research published in the journal Science, said: "Modern reefs are major centres of biodiversity with sophisticated ecosystems. Like corals, animals build reefs to defend against predators and competitors. We have found that animals were building reefs even before the evolution of complex animal life."