The initiation of the intracellular symbiosis that would give rise to mitochondria and eukaryotes was a major event in the history of life on earth. Hypotheses to explain eukaryogenesis fall into two broad and competing categories those proposing that the host was a phagocytotic proto-eukaryote that preyed upon the free-living mitochondrial ancestor (hereafter FMA), and those proposing that the host was an archaebacterium that engaged in syntrophy with the FMA. Of key importance to these hypotheses are whether the FMA was motile or nonmotile, and the atmospheric conditions under which the FMA thrived. Reconstructions of the FMA based on genome content of Rickettsiales representatives-generally considered to be the closest living relatives of mitochondria-indicate that it was nonmotile and aerobic. We have sequenced the genome of Candidatus Midichloria mitochondrii, a novel and phylogenetically divergent member of the Rickettsiales. We found that it possesses unique gene sets found in no other Rickettsiales, including 26 genes associated with flagellar assembly, and a cbb(3)-type cytochrome oxidase. Phylogenomic analyses show that these genes were inherited in a vertical fashion from an ancestral α-proteobacterium, and indicate that the FMA possessed a flagellum, and could undergo oxidative phosphorylation under both aerobic and microoxic conditions. These results indicate that the FMA played a more active and potentially parasitic role in eukaryogenesis than currently appreciated and provide an explanation for how the symbiosis could have evolved under low levels of oxygen.