The earliest record of animals (Metazoa) consists of trace and body fossils restricted to the last 35 Myr of the Precambrian. It has been proposed that animals arose much earlier and underwent significant evolution as a cryptic fauna; however, the need for any unrecorded prelude of significant duration has been disputed. In this context, we consider recent published research on the nature and chronology of the earliest fossil record of metazoans and on the molecular-based analysis that yielded older dates for the appearance of major animal groups. We review recent work on the climatic, geochemical, and ecological events that preceded animal fossils and consider their portent for metazoan evolution. We also discuss inferences about the physiology and gene content of the last common ancestor of animals and their closest unicellular relatives. We propose that the recorded Precambrian evolution of animals includes three intervals of advancement that begin with sponge-grade organisms, and that any preceding cryptic fauna would be no more complex than sponges. The molecular data do not require that more complex animals appeared well before the recognized fossil record; nor, however, do they rule the possibility out, particularly if the interval of simpler metazoan ancestors lasted no more than about 100 or 200 Myr. The geological record of abrupt changes in climate, biogeochemistry, and phytoplankton diversity can be taken to be the result of changes in the carbon cycle triggered by the appearance and diversification of metazoans in an organic carbon-rich ocean, but as yet no compelling evidence exists for this interpretation. By the end of this cryptic period, animals would already have possessed sophisticated systems of cell–cell signalling, adhesion, apoptosis, and segregated germ cells, possibly with a rudimentary body plan based on anterior–posterior organization. The controls on the timing and tempo of the earliest steps in metazoan evolution are unknown, but it seems likely that oxygen was a key factor in later diversification and increase in body size. We consider several recent scenarios describing how oxygen increased near the end of the Precambrian and propose that grazing and filter-feeding animals depleted a marine reservoir of suspended organic matter, releasing a microbial ‘clamp’ on atmospheric oxygen.