A significant proportion of the genomes of higher plants and vertebrates consists of transposable elements and their derivatives. Autonomous DNA type transposons encode a transposase that enables them to mobilize to a new chromosomal position in the host genome by a cut-and-paste mechanism. As this is potentially mutagenic, the host limits transposition through epigenetic gene silencing and heterochromatin formation. Here we show that a transposase from Arabidopsis thaliana that we named DAYSLEEPER is essential for normal plant growth; it shares several characteristics with the hAT (hobo, Activator, Tam3) family of transposases. DAYSLEEPER was isolated as a factor binding to a motif (Kubox1) present in the upstream region of the Arabidopsis DNA repair gene Ku70. This motif is also present in the upstream regions of many other plant genes. Plants lacking DAYSLEEPER or strongly overexpressing this gene do not develop in a normal manner. Furthermore, DAYSLEEPER overexpression results in the altered expression of many genes. Our data indicate that transposase-like genes can be essential for plant development and can also regulate global gene expression. Thus, transposases can become domesticated by the host to fulfil important cellular functions.