A central question in animal evolution is how multicellular animals evolved from unicellular ancestors. We hypothesize that membrane proteins must be key players in the development of multicellularity because they are well positioned to form the cell-cell contacts and to provide the intercellular communication required for the creation of complex organisms. Here we find that a major mechanism for the necessary increase in membrane protein complexity in the transition from non-metazoan to metazoan life was the new incorporation of domains from soluble proteins. The membrane proteins that have incorporated soluble domains in metazoans are enriched in many of the functions unique to multicellular organisms such as cell-cell adhesion, signaling, immune defense and developmental processes. They also show enhanced protein-protein interaction (PPI) network complexity and centrality, suggesting an important role in the cellular diversification found in complex organisms. Our results expose an evolutionary mechanism that contributed to the development of higher life forms.