F420 is a low-potential redox cofactor that mediates the transformations of a wide range of complex organic compounds. Considered one of the rarest cofactors in biology, F420 is best known for its role in methanogenesis and has only been chemically identified in two phyla to date, the Euryarchaeota and Actinobacteria. In this work, we show that this cofactor is more widely distributed than previously reported. We detected the genes encoding all five known F420 biosynthesis enzymes (cofC, cofD, cofE, cofG and cofH) in at least 653 bacterial and 173 archaeal species, including members of the dominant soil phyla Proteobacteria, Chloroflexi and Firmicutes. Metagenome datamining validated that these genes were disproportionately abundant in aerated soils compared with other ecosystems. We confirmed through high-performance liquid chromatography analysis that aerobically grown stationary-phase cultures of three bacterial species, Paracoccus denitrificans, Oligotropha carboxidovorans and Thermomicrobium roseum, synthesized F420, with oligoglutamate sidechains of different lengths. To understand the evolution of F420 biosynthesis, we also analyzed the distribution, phylogeny and genetic organization of the cof genes. Our data suggest that although the Fo precursor to F420 originated in methanogens, F420 itself was first synthesized in an ancestral actinobacterium. F420 biosynthesis genes were then disseminated horizontally to archaea and other bacteria. Together, our findings suggest that the cofactor is more significant in aerobic bacterial metabolism and soil ecosystem composition than previously thought. The cofactor may confer several competitive advantages for aerobic soil bacteria by mediating their central metabolic processes and broadening the range of organic compounds they can synthesize, detoxify and mineralize.