BACKGROUND: Transposable elements (TEs) are abundant genomic sequences that have been found to contribute to genome evolution in unexpected ways. Here, we characterize the evolutionary and functional characteristics of TE-derived human genome regulatory sequences uncovered by the high throughput mapping of DNaseI-hypersensitive (HS) sites. RESULTS: Human genome TEs were found to contribute substantially to HS regulatory sequences characterized in CD4+ T cells: 23% of HS sites contain TE-derived sequences. While HS sites are far more evolutionarily conserved than non HS sites in the human genome, consistent with their functional importance, TE-derived HS sites are highly divergent. Nevertheless, TE-derived HS sites were shown to be functionally relevant in terms of driving gene expression in CD4+ T cells. Genes involved in immune response are statistically over-represented among genes with TE-derived HS sites. A number of genes with both TE-derived HS sites and immune tissue related expression patterns were found to encode proteins involved in immune response such as T cell specific receptor antigens and secreted cytokines as well as proteins with clinical relevance to HIV and cancer. Genes with TE-derived HS sites have higher average levels of sequence and expression divergence between human and mouse orthologs compared to genes with non TE-derived HS sites. CONCLUSION: The results reported here support the notion that TEs provide a specific genome-wide mechanism for generating functionally relevant gene regulatory divergence between evolutionary lineages. REVIEWERS: This article was reviewed by Wolfgang J. Miller (nominated by Jerzy Jurka), Itai Yanai and Mikhail S.Gelfand.