Peptidases of the papain family play a key role in protein degradation, regulated proteolysis, and the host–pathogen arms race. Although the papain family has been the subject of many studies, knowledge about its diversity, origin, and evolution in Eukaryota, Bacteria, and Archaea is limited; thus, we aimed to address these long-standing knowledge gaps. We traced the origin and expansion of the papain family with a phylogenomic analysis, using sequence data from numerous prokaryotic and eukaryotic proteomes, transcriptomes, and genomes. We identified the full complement of the papain family in all prokaryotic and eukaryotic lineages. Analysis of the papain family provided strong evidence for its early diversification in the ancestor of eukaryotes. We found that the papain family has undergone complex and dynamic evolution through numerous gene duplications, which produced eight eukaryotic ancestral paralogous C1A lineages during eukaryogenesis. Different evolutionary forces operated on C1A peptidases, including gene duplication, horizontal gene transfer, and gene loss. This study challenges the current understanding of the origin and evolution of the papain family and provides valuable insights into their early diversification. The findings of this comprehensive study provide guidelines for future structural and functional studies of the papain family.