Genetic diversity created by transposable elements is an important source of functional variation upon which selection acts during evolution. Transposable elements are associated with adaptation to temperate climates in Drosophila, a SINE element is associated with the domestication of small dog breeds from the gray wolf and there is evidence that transposable elements were targets of selection during human evolution. Although the list of examples of transposable elements associated with host gene function continues to grow, proof that transposable elements are causative and not just correlated with functional variation is limited. Here we show that a transposable element (Hopscotch) inserted in a regulatory region of the maize domestication gene, teosinte branched1 (tb1), acts as an enhancer of gene expression and partially explains the increased apical dominance in maize compared to its progenitor, teosinte. Molecular dating indicates that the Hopscotch insertion predates maize domestication by at least 10,000 years, indicating that selection acted on standing variation rather than new mutation.