Eukaryotic algae rose to ecological relevance after the Neoproterozoic Snowball Earth glaciations, but the causes for this consequential evolutionary transition remain enigmatic. Cap carbonates were globally deposited directly after these glaciations, but they are usually organic barren or thermally overprinted. Here we show that uniquely-preserved cap dolostones of the Araras Group contain exceptional abundances of a newly identified biomarker: 25,28-bisnorgammacerane. Its secular occurrence, carbon isotope systematics and co-occurrence with other demethylated terpenoids suggest a mechanistic connection to extensive microbial degradation of ciliate-derived biomass in bacterially dominated ecosystems. Declining 25,28-bisnorgammacerane concentrations, and a parallel rise of steranes over hopanes, indicate the transition from a bacterial to eukaryotic dominated ecosystem after the Marinoan deglaciation. Nutrient levels already increased during the Cryogenian and were a prerequisite, but not the ultimate driver for the algal rise. Intense predatory pressure by bacterivorous protists may have irrevocably cleared self-sustaining cyanobacterial ecosystems, thereby creating the ecological opportunity that allowed for the persistent rise of eukaryotic algae to global importance.