VDE is a homing endonuclease gene in yeasts with an unusual evolutionary history including horizontal transmission, degeneration, and domestication into the mating-type switching locus HO. We investigate here the effects of these features on its molecular evolution. In addition, we correlate rates of evolution with results from site-directed mutagenesis studies. Functional elements have lower rates of evolution than degenerate ones and higher conservation at functionally important sites. However, functionally important and unimportant sites are equally likely to have been involved in the evolution of new function during the domestication of VDE into HO. The domestication event also indicates that VDE has been lost in some species and that VDE has been present in yeasts for more than 50 Myr.