Members of the Arabidopsis LSH1 and Oryza G1 (ALOG) family of proteins have been shown to function as key developmental regulators in land plants. However, their precise mode of action remains unclear. Using sensitive sequence and structure analysis, we show that the ALOG domains are a distinct version of the N-terminal DNA-binding domain shared by the XerC/D-like, protelomerase, topoisomerase-IA, and Flp tyrosine recombinases. ALOG domains are distinguished by the insertion of an additional zinc ribbon into this DNA-binding domain. In particular, we show that the ALOG domain is derived from the XerC/D-like recombinases of a novel class of DIRS-1-like retroposons. Copies of this element, which have been recently inactivated, are present in several marine metazoan lineages, whereas the stramenopile Ectocarpus, retains an active copy of the same. Thus, we predict that ALOG domains help establish organ identity and differentiation by binding specific DNA sequences and acting as transcription factors or recruiters of repressive chromatin. They are also found in certain plant defense proteins, where they are predicted to function as DNA sensors. The evolutionary history of the ALOG domain represents a unique instance of a domain, otherwise exclusively found in retroelements, being recruited as a specific transcription factor in the streptophyte lineage of plants. Hence, they add to the growing evidence for derivation of DNA-binding domains of eukaryotic specific TFs from mobile and selfish elements.