Acetylene occurs, by photolysis of methane, in the atmospheres of jovian planets and Titan. In contrast, acetylene is only a trace component of Earth's current atmosphere. Nonetheless, a methane-rich atmosphere has been hypothesized for early Earth; this atmosphere would also have been rich in acetylene. This poses a paradox, because acetylene is a potent inhibitor of many key anaerobic microbial processes, including methanogenesis, anaerobic methane oxidation, nitrogen fixation, and hydrogen oxidation. Fermentation of acetylene was discovered ∼25 years ago, and Pelobacter acetylenicuswas shown to grow on acetylene by virtue of acetylene hydratase, which results in the formation of acetaldehyde. Acetaldehyde subsequently dismutates to ethanol and acetate (plus some hydrogen). However, acetylene hydratase is specific for acetylene and does not react with any analogous compounds. We hypothesize that microbes with acetylene hydratase played a key role in the evolution of Earth's early biosphere by exploiting an available source of carbon from the atmosphere and in so doing formed protective niches that allowed for other microbial processes to flourish. Furthermore, the presence of acetylene in the atmosphere of a planet or planetoid could possibly represent evidence for an extraterrestrial anaerobic ecosystem. Astrobiology 8, 45–58.