THE Proterozoic aeon (2, 500-540 million years ago) saw episodic increases in atmospheric oxygen content1, the evolution of multicel-lular life2, 3 and, at its close, an enormous radiation of animal diversity3. These profound biological and environmental changes must have been linked, but the underlying mechanisms have been obscure. Here we show that hydrocarbons extracted from Proterozoic sediments in several locations worldwide are derived mainly from bacteria or other heterotrophs rather than from photosyn-thetic organisms. Biodegradation of algal products in segmenting matter was therefore unusually complete, indicating that organic material was extensively reworked as it sank slowly through the water column. We propose that a significant proportion of this reworking will have been mediated by sulphate-reducing bacteria, forming sulphide. The production of sulphide and consumption of oxygen near the ocean surface will have inhibited transport of O2 to the deep ocean. We find that preservation of algal-lipid skeletons improves at the beginning of the Cambrian, reflecting the increase in transport by rapidly sinking faecal pellets. We suggest that this rapid removal of organic matter will have increased oxygenation of surface waters, leading to a descent of the O2-sulphide interface to the sea floor and to marked changes in the marine environment, ultimately contributing to the Cambrian radiation.