AbstractThe RNase II family of 3′–5′ exoribonucleases is present in all domains of life, and eukaryotic family members Dis3 and Dis3L2 play essential roles in RNA degradation. Ascomycete yeasts contain both Dis3 and inactive RNase II-like “pseudonucleases.” The latter function as RNA-binding proteins that affect cell growth, cytokinesis, and fungal pathogenicity. However, the evolutionary origins of these pseudonucleases are unknown: What sequence of events led to their novel function, and when did these events occur? Here, we show how RNase II pseudonuclease homologs, including Saccharomyces cerevisiae Ssd1, are descended from active Dis3L2 enzymes. During fungal evolution, active site mutations in Dis3L2 homologs have arisen at least four times, in some cases following gene duplication. In contrast, N-terminal cold-shock domains and regulatory features are conserved across diverse dikarya and mucoromycota, suggesting that the nonnuclease function requires these regions. In the basidiomycete pathogenic yeast Cryptococcus neoformans, the single Ssd1/Dis3L2 homolog is required for cytokinesis from polyploid “titan” growth stages. This phenotype of C. neoformans Ssd1/Dis3L2 deletion is consistent with those of inactive fungal pseudonucleases, yet the protein retains an active site sequence signature. We propose that a nuclease-independent function for Dis3L2 arose in an ancestral hyphae-forming fungus. This second function has been conserved across hundreds of millions of years, whereas the RNase activity was lost repeatedly in independent lineages.