The nuclear receptor FXRalpha (NR1H4) plays a pivotal role in maintaining bile salt and lipid homeostasis by functioning as a bile salt sensor in mammals. In contrast, FXRbeta (NR1H5) from mouse is activated by lanosterol and does not share common ligands with FXRalpha. To further elucidate FXR ligand/receptor and structure/function relationships, we characterized a FXR gene from the marine skate, Leucoraja erinacea, representing a vertebrate lineage that diverged over 400 million years ago. Phylogenetic analysis of sequence data indicated that skate Fxr (sFxr) is a FXRbeta. There is an extra sequence in the middle of the sFxr ligand binding domain (LBD) compared with the LBD of FXRalpha. Luciferase reporter assays demonstrated that sFxr responds weakly to scymnol sulfate, bile salts, and synthetic FXRalpha ligands, in striking difference from human FXRalpha (hFXRalpha). Interestingly, all-trans retinoic acid was capable of transactivating both hFXRalpha and sFxr. When the extra amino acids in the sFxr LBD were deleted and replaced with the corresponding sequence from hFXRalpha, the mutant sFxr gained responsiveness to ursodeoxycholic acid, GW4064, and fexaramine. Surprisingly, chenodeoxycholic acid antagonized this activation. Together, these results indicate that FXR is an ancient nuclear receptor and suggest that FXRalpha may have acquired ligand specificity for bile acids later in evolution by deletion of a sequence from its LBD. Acquisition of this property may be an example of molecular exploitation, where an older molecule is recruited for a new functional role.