In all domains of life, NusG-like proteins make contacts similar to those of RNA polymerase and promote pause-free transcription yet may play different roles, defined by their divergent interactions with nucleic acids and accessory proteins, in the same cell. This duality is illustrated by Escherichia coli NusG and RfaH, which silence and activate xenogenes, respectively. We combined sequence analysis and recent functional and structural insights to envision the evolutionary transformation of NusG, a core regulator that we show is present in all cells using bacterial RNA polymerase, into a virulence factor, RfaH. Our results suggest a stepwise conversion of a NusG duplicate copy into a sequence-specific regulator which excludes NusG from its targets but does not compromise the regulation of housekeeping genes. We find that gene duplication and lateral transfer give rise to a surprising diversity within the only ubiquitous family of transcription factors.