The origin of the first nucleated eukaryote and the nature of the last common ancestor of the three domains of life are major questions in the evolutionary biology of cellular life on Earth, the solutions to which may be linked. Planctomycetes are unusual compartmentalized bacteria that include a membrane-bounded nucleoid. The possibility that they constitute a very deep branch of the domain Bacteria suggests a model for the evolution of the three domains of life from a last common ancestor that was a mesophile or moderate thermophile with a compartmentalized eukaryote-like cell plan. Planctomycetes and some members of the domain Archaea may have retained cell compartmentalization present in an original eukaryote-like last common ancestor of the three domains of life. The implications of this model for possible habitats of the early evolution of domains of cellular life and for interpretation of geological evidence relating to those habitats and the early emergence of life are examined here.