Earth’s surface has undergone a protracted oxygenation, which is commonly assumed to have profoundly affected the biosphere. However, basic aspects of this history are still debated—foremost oxygen (O2) levels in the oceans and atmosphere during the billion years leading up to the rise of algae and animals. Here we use isotope ratios of iron (Fe) in ironstones—Fe-rich sedimentary rocks deposited in nearshore marine settings—as a proxy for O2 levels in shallow seawater. We show that partial oxidation of dissolved Fe(II) was characteristic of Proterozoic shallow marine environments, whereas younger ironstones formed via complete oxidation of Fe(II). Regardless of the Fe(II) source, partial Fe(II) oxidation requires low O2 in the shallow oceans, settings crucial to eukaryotic evolution. Low O2 in surface waters can be linked to markedly low atmospheric O2—likely requiring less than 1% of modern levels. Based on our records, these conditions persisted (at least periodically) until a shift toward higher surface O2 levels between ca. 900 and 750 Ma, coincident with an apparent rise in eukaryotic ecosystem complexity. This supports the case that a first-order shift in surface O2 levels during this interval may have selected for life modes adapted to more oxygenated habitats.