New genes contribute substantially to adaptive evolutionary innovation, but the functional evolution of new mammalian genes has been little explored at a broad scale. Previous work established mRNA-derived gene duplicates, known as retrocopies, as useful models for the study of new gene origination. Here we combine extensive mammalian transcriptomic and epigenomic data to unveil the processes underlying the evolution of stripped-down retrocopies into complex new genes. We show that although some robustly expressed retrocopies are transcribed from preexisting promoters, the majority evolved new promoters from scratch or recruited proto-promoters in their genomic vicinity. In particular, many retrocopy promoters emerged from ancestral enhancers or bivalent regulatory elements, or are located in CpG islands not associated to other genes. We detected 88-280 selectively preserved retrocopies in the different investigated mammals, illustrating that the aforementioned mechanisms facilitated the birth of many functional retrogenes during mammalian evolution. The regulatory evolution of originally monoexonic retrocopies was frequently accompanied by exon gain, which facilitated the cooption of distant promoters and in many cases allowed the expression of alternative isoforms. While young retrogenes are often initially expressed in the testis, increased regulatory and structural complexities allowed retrogenes to functionally diversify and evolve somatic organ functions, sometimes as complex as those of their parents. Thus, some retrogenes evolved the capacity to temporarily substitute their parents during the process of male meiotic X inactivation, while others rendered parental functions completely superfluous, allowing for parental gene loss. Overall, our reconstruction of the complete 'life history' of mammalian retrogenes highlights the usefulness of retroposition as a general model for understanding new gene birth and functional evolution.