The gill is widely accepted to have played a key role in the adaptive radiation of early vertebrates by supplanting the skin as the dominant site of gas exchange. However, in the most basal extant craniates, the hagfishes, gills play only a minor role in gas exchange. In contrast, we found hagfish gills to be associated with a tremendous capacity for acid-base regulation. Indeed, Pacific hagfish exposed acutely to severe sustained hypercarbia tolerated among the most severe blood acidoses ever reported (1.2 pH unit reduction) and subsequently exhibited the greatest degree of acid-base compensation ever observed in an aquatic chordate. This was accomplished through an unprecedented increase in plasma [HCO3−] (>75 mM) in exchange for [Cl−]. We thus propose that the first physiological function of the ancestral gill was acid-base regulation, and that the gill was later co-opted for its central role in gas exchange in more derived aquatic vertebrates.