We know little about the genomic events that led to the advent of a multicellular grade of organization in animals, one of the most dramatic transitions in evolution. Metazoan multicellularity is correlated with the evolution of embryogenesis, which presumably was underpinned by a gene regulatory network reliant on the differential activation of signaling pathways and transcription factors. Many transcription factor genes that play critical roles in bilaterian development largely appear to have evolved before the divergence of cnidarian and bilaterian lineages. In contrast, sponges seem to have a more limited suite of transcription factors, suggesting that the developmental regulatory gene repertoire changed markedly during early metazoan evolution. Using whole-genome information from the sponge Amphimedon queenslandica, a range of eumetazoans, and the choanoflagellate Monosiga brevicollis, we investigate the genesis and expansion of homeobox, Sox, T-box, and Fox transcription factor genes. Comparative analyses reveal that novel transcription factor domains (such as Paired, POU, and T-box) arose very early in metazoan evolution, prior to the separation of extant metazoan phyla but after the divergence of choanoflagellate and metazoan lineages. Phylogenetic analyses indicate that transcription factor classes then gradually expanded at the base of Metazoa before the bilaterian radiation, with each class following a different evolutionary trajectory. Based on the limited number of transcription factors in the Amphimedon genome, we infer that the genome of the metazoan last common ancestor included fewer gene members in each class than are present in extant eumetazoans. Transcription factor orthologues present in sponge, cnidarian, and bilaterian genomes may represent part of the core metazoan regulatory network underlying the origin of animal development and multicellularity.