The oxidase test is used to identify bacteria that produce cytochrome c oxidase, an enzyme of the bacterial electron transport chain.
When present, the cytochrome c oxidase oxidizes the reagent (tetramethyl-p-phenylenediamine) to (indophenols) purple color end product. When the enzyme is not present, the reagent remains reduced and is colorless.
All bacteria that are oxidase positive are aerobic, and can use oxygen as a terminal electron acceptor in respiration. This does NOT mean that they are strict aerobes. Bacteria that are oxidase-negative may be anaerobic, aerobic, or facultative; the oxidase negative result just means that these organisms do not have the cytochrome c oxidase that oxidizes the test reagent. They may respire using other oxidases in electron transport.