Numerous palaeovalleys formed extensive drowned estuaries during Eocene transgressions along the southwestern part of the southern margin of Australia. The Tertiary sediments of the Cowan palaeovalley have been extensively drilled, revealing deposition of the Norseman Formation during the Middle Eocene Tortachilla transgression. Initial deposition occurred during transgression of the valley to form a drowned estuary. Sediments consisted of coarse-grained muddy, lithic, iron and glauconite-rich sands and gravels of mixed carbonate and quartz. Pure carbonates accumulated during the highstand, produced by a typical shallow temperate water assemblage of bryozoans, coralline algae, echinoids and molluscs and were swept into shoals by strong tidal currents. Minor "tropical" components in the form of large benthic foraminifers and dasycladacean algae are present. Coarse bryozoan and trough cross-bedded carbonate sands accumulated in the margins of the estuary and fine bryozoan sands in the deeper parts. Rhodoliths accumulated to form shoals in sheltered localities. The Spencer Gulf and Gulf St. Vincent of South Australia provide close modern analogues to the Cowan palaeovalley and the Norseman Formation. Modern carbonate sediments off Esperance on the south coast of Western Australia contain "tropical" faunal elements within an otherwise temperate skeletal assemblage and also provide a modern analogue. The Norseman Formation thus provides an excellent example of cool-water carbonate deposition in near-shore, tide-dominated environments. This study complements and contrasts existing cool-water shelf facies models based on Tertiary carbonates deposited on deep shelves elsewhere in southern Australia.