Chlamydomonas reinhardtii, Volvox carteri, and their relatives in the family Volvocaceae provide an excellent opportunity for studying how multicellular organisms with differentiated cell types evolved from unicellular ancestors. While C. reinhardtii is unicellular, V. carteri is multicellular with two cell types, one of which resembles C. reinhardtii cytologically but is terminally differentiated. Maintenance of this "somatic cell" fate is controlled by RegA, a putative transcription factor. We recently showed that RegA shares a conserved region with several predicted V. carteri and C. reinhardtii proteins and that this region, the VARL domain, is likely to include a DNA-binding SAND domain. As the next step toward understanding the evolutionary origins of the regA gene, we analyzed the genome sequences of C. reinhardtii and V. carteri to identify additional genes with the potential to encode VARL domain proteins. Here we report that the VARL gene family, which consists of 12 members in C. reinhardtii and 14 in V. carteri, has experienced a complex evolutionary history in which members of the family have been both gained and lost over time, although several pairs of potentially orthologous genes can still be identified. We find that regA is part of a tandem array of four VARL genes in V. carteri but that a similar array is absent in C. reinhardtii. Most importantly, our phylogenetic analysis suggests that a proto-regA gene was present in a common unicellular ancestor of V. carteri and C. reinhardtii and that this gene was lost in the latter lineage.