Steroids are indispensable components of the eukaryotic cellular membrane and the acquisition of steroid biosynthesis was a key factor that enabled the evolution of eukaryotes. The polycyclic carbon structures of steroids can be preserved in sedimentary rocks as chemical fossils for billions of years and thus provide invaluable clues to trace eukaryotic evolution from the distant past. Steroid biosynthesis consists of (1) the production of protosteroids and (2) the subsequent modifications toward “modern‐type” steroids such as cholesterol and stigmasterol. While protosteroid biosynthesis requires only two genes for the cyclization of squalene, complete modification of protosteroids involves ~10 additional genes. Eukaryotes universally possess at least some of those additional genes and thus produce modern‐type steroids as major final products. The geological biomarker records suggest a prolonged period of solely protosteroid production in the mid‐Proterozoic before the advent of modern‐type steroids in the Neoproterozoic. It has been proposed that mid‐Proterozoic protosteroids were produced by hypothetical stem‐group eukaryotes that presumably possessed genes only for protosteroid production, even though in modern environments protosteroid production as a final product is found exclusively in bacteria. The host identity of mid‐Proterozoic steroid producers is crucial for understanding the early evolution of eukaryotes. In this perspective, we discuss how geological biomarker data and genetic data complement each other and potentially provide a more coherent scenario for the evolution of steroids and associated early eukaryotes. We further discuss the potential impacts that steroids had on the evolution of aerobic metabolism in eukaryotes, which may have been an important factor for the eventual ecological dominance of eukaryotes in many modern environments.