The DNA sequence recognized by a transcription regulator can be conserved across large evolutionary distances. For example, it is known that many homologous regulators in yeasts and mammals can recognize the same (or closely related) DNA sequences. In contrast to this paradigm, we describe a case in which the DNA-binding specificity of a transcription regulator has changed so extensively (and over a much smaller evolutionary distance) that its cis-regulatory sequence appears unrelated in different species. Bioinformatic, genetic, and biochemical approaches were used to document and analyze a major change in the DNA-binding specificity of Matα1, a regulator of cell-type specification in ascomycete fungi. Despite this change, Matα1 controls the same core set of genes in the hemiascomycetes because its DNA recognition site has evolved with it, preserving the protein-DNA interaction but significantly changing its molecular details. Matα1 and its recognition sequence diverged most dramatically in the common ancestor of the CTG-clade (Candida albicans, Candida lusitaniae, and related species), apparently without the aid of a gene duplication event. Our findings suggest that DNA-binding specificity divergence between orthologous transcription regulators may be more prevalent than previously thought and that seemingly unrelated cis-regulatory sequences can nonetheless be homologous. These findings have important implications for understanding transcriptional network evolution and for the bioinformatic analysis of regulatory circuits.