Molecular trees and geochemical markers suggest the divergence of dinoflagellates as early eukaryotes (~650 million years ago), but the traditional fossil record of cysts (dinocysts) starts during the Triassic (~230 million years ago). A re-evaluation of the pre-Triassic record shows that many acritarchs (microfossils of uncertain affinities) are dinocysts representing “missing” fossil evidence. Traditional diagnostic criteria for dinocysts, based on morphologic comparisons with motile stages, are biased towards thecate species. The approach proposed here, based on the more natural comparison with living cysts, includes athecate species. Many living cysts of athecate species would be “acritarchs” if found as fossils, and many earlier acritarchs would be accepted as dinoflagellate cysts if found living. The earliest acritarchs represent an innovation with profound implications for evolution: a cell wall of sporopollenin-like material enabling survival from microbial attack, in a then microbial-dominated world. Related cell wall material most likely evolved as protection for crucial stages in sexual reproduction (e.g., cysts in ciliates and dinoflagellates, and spores and pollen in algae and plants). Ciliates and dinoflagellates may have evolved in response to extreme climatic conditions in the Cryogenian, where a robust resting cyst would be advantageous. Thecate dinoflagellates most likely evolved from athecate forms, possibly in response to predatory pressure.