Understanding marine environmental change and associated biological turnover across the Palaeocene-Eocene Thermal Maximum (PETM; ~56 Ma)-the most pronounced Cenozoic short-term global warming event-is important because of the potential role of the ocean in atmospheric CO2 drawdown, yet proxies for tracing marine productivity and oxygenation across the PETM are limited and results remain controversial. Here we show that a high-resolution record of South Atlantic Ocean bottom water oxygenation can be extracted from exceptionally preserved magnetofossils-the bioinorganic magnetite nanocrystals produced by magnetotactic bacteria (MTB) using a new multiscale environmental magnetic approach. Our results suggest that a transient MTB bloom occurred due to increased nutrient supply. Bottom water oxygenation decreased gradually from the onset to the peak PETM. These observations provide a record of microbial response to the PETM and establish the value of magnetofossils as palaeoenvironmental indicators.