A general theory giving an explanation of microbial cell differentiation is presented. Based on experimental results, an unstable hyperoxidant state is postulated to trigger differentiation. Simple rules, involving the reduction of dioxygen and the isolation from dioxygen by diverse mechanisms, are proposed to govern transitions between the growth state and the differentiated states. With this view, common features of microbial differentiation processes, dimorphic growth, cell differentiation in dioxygen evolving phototrophs and in anaerobes are analyzed. The theory could have implications for understanding cell differentiation in higher organisms.