Evolutionary change in gene regulation can result from changes in cis-regulatory elements, leading to differences in the temporal and spatial expression of genes or in the coding region of transcription factors leading to novel functions or both. Although there is a growing body of evidence supporting the importance of cis-regulatory evolution, examples of protein-mediated evolution of novel developmental pathways have not been demonstrated. Here, we investigate the evolution of prolactin (PRL) expression in endometrial cells, which is essential for placentation/pregnancy in eutherian mammals and is a direct regulatory target of the transcription factor HoxA-11. Here, we show that (i) endometrial PRL expression is a derived feature of placental mammals, (ii) the PRL regulatory gene HoxA-11 experienced a period of strong positive selection in the stem-lineage of eutherian mammals, and (iii) only HoxA-11 proteins from placental mammals, including the reconstructed ancestral eutherian gene, are able to up-regulate PRL from the promoter used in endometrial cells. In contrast, HoxA-11 from the reconstructed therian ancestor, opossum, platypus, and chicken are unable to up-regulate PRL expression. These results demonstrate that the evolution of novel gene expression domains is not only mediated by the evolution of cis-regulatory elements but can also require evolutionary changes of transcription factor proteins themselves.