Magnetosome chains produced by magnetotactic bacteria are important paleoenvironmental and paleomagnetic recorders. It has been shown that magnetic properties of magnetosome chains are closely related to their morphology and chain structures; however, the in situ structures of magnetosome chains in sediments (magnetofossils) are not known. Magnetosome chains are subject to various deformations after cell dissolution and are therefore unlikely to be fully intact, obscuring their original magnetic signals. Here, we use finite element micromagnetic simulations to quantify changes in magnetic signals in response to chain deformation, in particular, as a function of variable degrees of bending and collapse. Our results indicate that bending/collapse leads to a significant coercivity reduction and domain state transition of the chain. Therefore, hysteresis parameters can be used to assess the degree of chain bending/collapse in magnetofossil‐rich sediments. Calculations of the contributions of chain bending/collapse to the post‐depositional remanent magnetization (pDRM) of magnetofossils indicate that pDRM remains both faithful to the pre‐bending/collapse natural remanent magnetization, and that the remanence of some structurally deformed magnetofossil assemblages remains thermally stable over billion‐year timescales, suggesting that even strongly deformed magnetosome chains in ancient geological materials retain faithful paleomagnetic records and thus have potentials for tracing ancient geomagnetic field variations and microbial activities on early Earth. Plain Language Summary: Magnetotactic bacteria (MTB) synthesize magnetosome chains composed of nearly uniform magnetic nanoparticles (magnetite or greigite). Magnetosomes can be preserved as magnetofossils in sediments after MTB cell death, which work as a magnetic tape to encode critical signals about past geomagnetic field variations, environmental changes, and microbial activities. However, these geophysical signals may likely be corrupted due to potential chain collapse during sediment deformation, which complicates signal recovery. Here, we used computer simulation to calculate the magnetic signal variations of magnetofossils related to chain bending or collapse. Our simulations suggest that collapsed magnetofossils can still retain faithful paleomagnetic signals that are stable over very long geological periods. This approach also provides a framework for estimating the chain collapse degree that is critical for magnetic signal interpretation. Key Points: Hysteresis parameters can be used to estimate the collapse degree of magnetofossil chainsMicromagnetic calculations confirm that collapsed magnetofossils retain their primary paleomagnetic signalMagnetic remanence carried by magnetofossils remains thermally stable over long geological time [ABSTRACT FROM AUTHOR]