A broad range of organisms, from prokaryotes to higher animals, have the ability to sense and utilize Earth’s geomagnetic field—a behavior known as magnetoreception. Although our knowledge of the physiological mechanisms of magnetoreception has increased substantially over recent decades, the origin of this behavior remains a fundamental question in evolutionary biology. Despite this, there is growing evidence that magnetic iron mineral biosynthesis by prokaryotes may represent the earliest form of biogenic magnetic sensors on Earth. Here, we integrate new data from microbiology, geology and nanotechnology, and propose that initial biomineralization of intracellular iron nanoparticles in early life evolved as a mechanism for mitigating the toxicity of reactive oxygen species (ROS), as ultraviolet radiation and free-iron-generated ROS would have been a major environmental challenge for life on early Earth. This iron-based system could have later been co-opted as a magnetic sensor for magnetoreception in microorganisms, suggesting an origin of microbial magnetoreception as the result of the evolutionary process of exaptation.