<jats:title>Abstract</jats:title> <jats:p>Most vertebrate sex-determining genes (SDGs) emerge as neofunctionalized genes through duplication and/or mutation of ancestral genes that are involved with sexual differentiation. We previously demonstrated dm-W to be the SDG in the African clawed frog Xenopus laevis and found that a portion of this gene emerged from the masculinization gene dmrt1 after allotetraploidization by interspecific hybridization between two ancestral species around 17–18 Ma. dm-W has four exons consisting of a noncoding exon 1, dmrt1-derived exons 2 and 3, and an orphan exon 4 (Ex4) of unknown origin that includes coding sequence (CDS). In this study, we searched for the origin of Ex4 and investigated the function of the CDS of this exon. We found that the Ex4-CDS is derived from a noncoding portion of the hAT-10 family of DNA transposon. Evolutionary analysis of transposons and determination of the Ex4 sequences from three other species indicated that Ex4 was generated before the diversification of most or all extant allotetraploid species in subgenus Xenopus, during which time we hypothesize that transposase activity of this hAT superfamily was active. Using DNA–protein binding and transfection assays, we further demonstrate that the Ex4-encoded amino acid sequence increases the DNA-binding ability and transrepression activity of DM-W. These findings suggest that the conversion of the noncoding transposon sequence to the CDS of dm-W contributed to neofunctionalization of a new chimeric SDG in the ancestor of the allotetraploid Xenopus species, offering new insights into de novo origin and functional evolution of chimerical genes.</jats:p>