Ciliated protozoans perform extreme forms of programmed somatic DNA rearrangement during development. The model ciliate Tetrahymena thermophila removes 34% of its germline micronuclear genome from somatic macronuclei by excising thousands of internal eliminated sequences (IESs), a process that shares features with transposon excision. Indeed, piggyBac transposon-derived genes are necessary for genome-wide IES excision in both Tetrahymena (TPB2 [Tetrahymena piggyBac-like 2] and LIA5) and Paramecium tetraurelia (PiggyMac). T. thermophila has at least three other piggyBac-derived genes: TPB1, TPB6, and TPB7. Here, we show that TPB1 and TPB6 excise a small, distinct set of 12 unusual IESs that disrupt exons. TPB1-deficient cells complete mating, but their progeny exhibit slow growth, giant vacuoles, and osmotic shock sensitivity due to retention of an IES in the vacuolar gene DOP1 (Dopey domain-containing protein). Unlike most IESs, TPB1-dependent IESs have piggyBac-like terminal inverted motifs that are necessary for excision. Transposon-like excision mediated by TPB1 and TPB6 provides direct evidence for a transposon origin of not only IES excision machinery but also IESs themselves. Our study highlights a division of labor among ciliate piggyBac-derived genes, which carry out mutually exclusive categories of excision events mediated by either transposon-like features or RNA-directed heterochromatin.