Prokaryotes are single-celled organisms that lack membrane-bound organelles and have a single chromosome containing all their DNA. They can be photoautotrophs, chemoautotrophs, photoheterotrophs, or chemoheterotrophs. Photoautotrophs obtain their energy from light and their carbon from fixing CO₂, an inorganic compound. Chemoautotrophs obtain energy chemically, but they also fix CO₂, an inorganic compound, to receive carbon. Photoheterotrophs receive energy from light, but receive organic carbon from ingesting other organisms. Chemoheterotrophs receive energy and carbon from organic compounds by ingesting organisms or other material containing fixed carbon.

The first types of cells on the planet were prokaryotic cells, appearing 3.5 billion years ago. In contrast, eukaryotes (single- or multi-celled organisms with membrane-bound organelles and multiple chromosomes) did not appear until about 1.8 billion years ago. These first eukaryotic cells evolved from prokaryotic cells after the plasma membrane of the cell (a phospholipid bilayer) infolded and formed organelles enclosed by membranes that were formerly part of the plasma membrane. Chloroplasts and mitochondria, allowing the conversion of light energy to potential, chemical energy and potential energy to chemical energy that the cell can use respectively, probably evolved from photoautotrophic and chemoautotropic prokaryotes ingested by early chemoheterotropic eukaryotic cells.

Photoautotrophic prokaryotes made the atmosphere aerobic. The atmosphere on a young earth was composed of CO, CO₂, and N₂. Photosynthetic prokaryotes that accumulated on stromatolites produced oxygen as a product of photosynthesis, while taking in CO₂ and possibly other gases while producing O₂. This oxygen concentration built up until 2.5 billion years ago (1 billion years after the first prokaryotes appeared), Earth's atmosphere was aerobic. Prokaryotic cells are also smaller than eukaryotic cells, most measuring between 1-10 um. This is because they rely entirely on diffusion to spread nutrients throughout the cytoplasm. All prokaryotic cells are divided into two domains: Archaea and Bacteria.

Archaea are different from bacteria in several important ways. First, they are not susceptible to antibiotics. They also have introns, or non-coding parts of genes that regulate gene expression, in some genes, while bacteria lack introns altogether. This is why it is difficult to use recombinant DNA technology to place eukaryotic genes in some bacteria: bacteria can not cut out the noncoding sequences like eukaryotes and archaeans do. Domains Eukarya and Archaea also share similar RNA polymerases, which tend to be much more complex than those of bacteria. Ribosomal RNA is another difference between archaeans and bacteria. Although bacteria and archaeans have similar rRNA (which tends to mutate very slowly), there are about a dozen short sequences that distinguish the two prokaryotic domains. Surprisingly, eukaryotes seem to have the same sequences are archaean, suggesting that these two domains diverged after Bacteria and Archaea diverged. Archaean and bacterial cell walls are different because bacteria use peptidoglycan, a polymer of sugars linked with polypeptides, in their cell walls, while Archaea do not have true peptidoglycan. Their membrane lipids are different as well, because of differences in the carbon chain structure. The organisms in domain Bacteria have unbranched carbon chains in the phospholipid bilayer, but the organisms of domain Archaea can have branched chains, similar to eukaryotes. For these reasons, the domains Archaea and Bacteria are two distinct domains, even though they both consist of prokaryotic cells.