Cytochrome P450 monooxygenases (CYPs/P450s) and their redox partners, ferredoxins, are ubiquitous in organisms. P450s have been studied in biology for over six decades owing to their distinct catalytic activities, including their role in drug metabolism. Ferredoxins are ancient proteins involved in oxidation-reduction reactions, such as transferring electrons to P450s. The evolution and diversification of P450s in various organisms have received little attention and no information is available for archaea. This study is aimed at addressing this research gap. Genome-wide analysis revealed 1204 P450s belonging to 34 P450 families and 112 P450 subfamilies, where some families and subfamilies are expanded in archaea. We also identified 353 ferredoxins belonging to the four types 2Fe-2S, 3Fe-4S, 7Fe-4S and 2[4Fe-4S] in 40 archaeal species. We found that bacteria and archaea shared the CYP109, CYP147 and CYP197 families, as well as several ferredoxin subtypes, and that these genes are co-present on archaeal plasmids and chromosomes, implying the plasmid-mediated lateral transfer of these genes from bacteria to archaea. The absence of ferredoxins and ferredoxin reductases in the P450 operons suggests that the lateral transfer of these genes is independent. We present different scenarios for the evolution and diversification of P450s and ferredoxins in archaea. Based on the phylogenetic analysis and high affinity to diverged P450s, we propose that archaeal P450s could have diverged from CYP109, CYP147 and CYP197. Based on this study’s results, we propose that all archaeal P450s are bacterial in origin and that the original archaea had no P450s.