REPs are highly repeated intergenic palindromic sequences often clustered into structures called BIMEs including two individual REPs separated by short linker of variable length. They play a variety of key roles in the cell. REPs also resemble the sub-terminal hairpins of the atypical IS200/605 family of insertion sequences which encode Y1 transposases (TnpAIS200/IS605). These belong to the HUH endonuclease family, carry a single catalytic tyrosine (Y) and promote single strand transposition. Recently, a new clade of Y1 transposases (TnpAREP) was found associated with REP/BIME in structures called REPtrons. It has been suggested that TnpAREP is responsible for REP/BIME proliferation over genomes. We analysed and compared REP distribution and REPtron structure in numerous available E. coli and Shigella strains. Phylogenetic analysis clearly indicated that tnpAREP was acquired early in the species radiation and was lost later in some strains. To understand REP/BIME behaviour within the host genome, we also studied E. coli K12 TnpAREP activity in vitro and demonstrated that it catalyses cleavage and recombination of BIMEs. While TnpAREP shared the same general organization and similar catalytic characteristics with TnpAIS200/IS605 transposases, it exhibited distinct properties potentially important in the creation of BIME variability and in their amplification. TnpAREP may therefore be one of the first examples of transposase domestication in prokaryotes.