Tc1-like transposable elements from teleost fish have been phylogenetically examined to determine the mechanisms involved in their evolution and conserved domains of function. We identified two new functional domains in these elements. The first is a bipartite nuclear localization signal, indicating that transposons can take advantage of the transport machinery of host cells for nuclear uptake of their transposases. The second is a novel combination of a paired domain-related protein motif juxtaposed to a leucine zipper-like domain located in the putative DNA-binding regions of the transposases. This domain coexists with a special inverted repeat structure in certain transposons in such phylogenetically distant hosts as fish and insects. Our data indicate that reassortment of functional domains and horizontal transmission between species are involved in the formation and spread of new types of transposable elements.