The article presents a genetic annealing model to explain the universal ancestor of all extant life. The model, derived from the physical annealing process, suggests that early cellular entities (progenotes) were very simple and had high mutation rates and frequent lateral gene transfers. As evolution progressed, the mutation rate and scope of lateral gene transfers decreased, leading to the emergence of more complex and integrated cellular structures. The universal ancestor was not a single organism but a diverse community of cells that evolved as a unit, eventually breaking into three distinct communities, which became the three primary lines of descent: Archaea, Bacteria, and Eucarya. The model emphasizes the role of lateral gene transfers in the early evolutionary dynamics and the gradual crystallization of cellular subsystems, making them less susceptible to lateral changes. The universal phylogenetic tree, rooted in the rRNA sequence comparisons, reflects the common history of central components of the ribosome and other genes, but not the deep branchings that define organismal lineages. The genetic annealing model provides a new perspective on the nature of the universal ancestor and the early stages of life's evolution.The article presents a genetic annealing model to explain the universal ancestor of all extant life. The model, derived from the physical annealing process, suggests that early cellular entities (progenotes) were very simple and had high mutation rates and frequent lateral gene transfers. As evolution progressed, the mutation rate and scope of lateral gene transfers decreased, leading to the emergence of more complex and integrated cellular structures. The universal ancestor was not a single organism but a diverse community of cells that evolved as a unit, eventually breaking into three distinct communities, which became the three primary lines of descent: Archaea, Bacteria, and Eucarya. The model emphasizes the role of lateral gene transfers in the early evolutionary dynamics and the gradual crystallization of cellular subsystems, making them less susceptible to lateral changes. The universal phylogenetic tree, rooted in the rRNA sequence comparisons, reflects the common history of central components of the ribosome and other genes, but not the deep branchings that define organismal lineages. The genetic annealing model provides a new perspective on the nature of the universal ancestor and the early stages of life's evolution.