A growing debate in evolutionary and developmental biology concerns the relative contribution of cis-regulatory and protein (particularly transcription factor) changes to developmental evolution. Central to this argument are the perceived conservation of transcription factor functions and the modular architecture of cis-regulatory elements. In this paper, we review recent studies on transcription factor proteins that show that transcription factor genes undergo adaptive evolution and evolve novel functions that contribute to the evolution of development. Furthermore, we review experimental work that shows that transcription factor proteins are modular and can evolve with minimal pleiotropic effects. We conclude that changes in the function of proteins are likely directly contributing to developmental evolution.