Magnetotactic bacteria (MTB) produce chains of intracellular magnetite and/or greigite crystals and respond to an ambient magnetic field. MTB are considered to be microaerophilic to anaerobic organisms that live at and below the oxic-anoxic transition zone of aquatic environments. On the basis of rock magnetic analyses, including first-order reversal curve diagrams and isothermal remanent magnetization component analyses, along with transmission electron microscopy, we demonstrate that bacterial magnetites (magnetofossils) dominate magnetic mineral assemblages throughout a 76 m thickness of red clay at Integrated Ocean Drilling Program Site U1365 in the South Pacific Gyre, as well as in subsurface red clay of the North Pacific Gyre, where the sediment column contains abundant dissolved oxygen and no oxic-anoxic transition zone exists. This implies that MTB inhabit red clay; this conflicts with widespread interpretations of MTB ecology, namely that they are microaerophilic, requiring low levels of oxygen to grow and produce magnetite, and that magnetotaxis is used to help them find optimal positions in a strong vertical chemical gradient. Most magnetofossils in the red clay have cubo-octahedral morphology. This supports the notion that magnetofossil morphology can be a paleoenvironmental indicator; the proportion of elongated magnetofossils increases in less oxic environments. Our results also have implications for red-clay paleomagnetism in that magnetofossils may cause much-delayed remanence acquisition if MTB can live at decimeter depths within red clay.