The transcription factor COE (collier/olfactory-1/early B cell factor) is an unusual basic helix-loop-helix transcription factor as it lacks a basic domain and is maintained as a single copy gene in the genomes of all currently analysed non-vertebrate Metazoan genomes. Given the unique features of the COE gene, its proposed ancestral role in the specification of chemosensory neurons and the wealth of functional data from vertebrates and Drosophila, the evolutionary history of the COE gene can be readily investigated. We have examined the ways in which COE expression has diversified among the Metazoa by analysing its expression from representatives of four disparate invertebrate phyla: Ctenophora (Mnemiopsis leidyi); Mollusca (Haliotis asinina); Annelida (Capitella teleta and Chaetopterus) and Echinodermata (Strongylocentrotus purpuratus). In addition, we have studied COE function with knockdown experiments in S. purpuratus, which indicate that COE is likely to be involved in repressing serotonergic cell fate in the apical ganglion of dipleurula larvae. These analyses suggest that COE has played an important role in the evolution of ectodermally derived tissues (likely primarily nervous tissues) and mesodermally derived tissues. Our results provide a broad evolutionary foundation from which further studies aimed at the functional characterisation and evolution of COE can be investigated.