Signal perception is a key function in regulating biological activities and adapting to changing environments. Per-Arnt-Sim (PAS) domains are ubiquitous sensors found in diverse receptors in bacteria, archaea, and eukaryotes, but their origins, distribution across the tree of life, and extent of their functional diversity are not fully characterized. Here, we show that using sequence conservation and structural information, it is possible to propose specific and potential functions for a large portion of nearly 3 million PAS domains. Our analysis suggests that PAS domains originated in bacteria and were horizontally transferred to archaea and eukaryotes. We reveal that gas sensing via a heme cofactor evolved independently in several lineages, whereas redox and light sensing via flavin adenine dinucleotide and flavin mononucleotide cofactors have the same origin. The close relatedness of human PAS domains to those in bacteria provides an opportunity for drug design by exploring potential natural ligands and cofactors for bacterial homologs.