Biology lacks consensus on a definition of life despite extensive theoretical development. Existing accounts emphasize metabolism, replication, evolution, autopoiesis, and semiosis as defining characteristics of living systems. While these frameworks illuminate important structural, functional, and semiotic dimensions of life, they do not fully address the ontological transition through which matter becomes capable of sustaining interpretability. This paper proposes that life begins with the co-emergence of observer and observed within a relational differentiation that enables interpretability. Living systems are not merely self-organizing or semiotic structures but relational differentiations within matter that sustain interpretive polarity. This account extends autopoietic, phenomenological, and biosemiotic approaches by identifying the observer–observed co-emergence as the ontological condition that makes semiosis and interpretation possible. Subject and object are understood as conceptual attenuations of this more fundamental relational differentiation rather than as ontological primitives. Meta-cognition represents a recursive stabilization of the observer–observed relation rather than its origin. Since all scientific and humanistic inquiry presupposes an observer capable of interpretation and reflection, the observer must be recognized not merely as a methodological variable but as a constitutive dimension of life and knowledge. By grounding life in the emergence of interpretability rather than solely in material organization, this paper proposes a relational ontology integrating biological, experiential, and epistemological dimensions of living systems.