Molecular oxygen is a stable diradical. All O2‐dependent enzymes employ a radical mechanism. Generated by cyanobacteria, O2 started accumulating on Earth 2.4 billion years ago. Its evolutionary impact is traditionally sought in respiration and energy yield. We mapped 365 O2‐dependent enzymatic reactions of prokaryotes to phylogenies for the corresponding 792 protein families. The main physiological adaptations imparted by O2‐dependent enzymes were not energy conservation, but novel organic substrate oxidations and O2‐dependent, hence O2‐tolerant, alternative pathways for O2‐inhibited reactions. Oxygen‐dependent enzymes evolved in ancestrally anaerobic pathways for essential cofactor biosynthesis including NAD+, pyridoxal, thiamine, ubiquinone, cobalamin, heme, and chlorophyll. These innovations allowed prokaryotes to synthesize essential cofactors in O2‐containing environments, a prerequisite for the later emergence of aerobic respiratory chains.