Neurotrophins (Nt) and their tyrosine kinase Trk receptors play an essential role in the development and maintenance of the complex vertebrate nervous system. Invertebrate genome sequencing projects have suggested that the Nt/Trk system is a vertebrate innovation. We describe the isolation and characterisation of the amphioxus Trk receptor, AmphiTrk. Its ancestral link to vertebrate Trk receptors is supported by phylogenetic analysis and domain characterisation. The genomic structure of AmphiTrk strongly suggests that a ProtoTrk gene emerged by means of exon-shuffling prior to the cephalochordate/vertebrate split. We also examined the physiological response of AmphiTrk to vertebrate neurotrophins, and found that despite 500 million years of divergence, AmphiTrk transduces signals mediated by NGF, BDNF, NT3 and NT4. Markedly, AmphiTrk is able to activate survival and differentiation pathways, but fails to activate the PLCgamma pathway, which is involved in synaptic plasticity in higher vertebrates. AmphiTrk is expressed during amphioxus embryogenesis in sensory neural precursors in the epidermis, which possesses single migratory cells. We propose that the duplication and divergence of the Nt/Trk system, in tandem with recruitment of the PLCgamma pathway, may have provided the genetic basis for a key aspect of vertebrate evolution: the complexity of the nervous system.