The adrenal and sex steroids receptor clade arose from an ancestral nuclear receptor in a primitive vertebrate at least 540 million years ago during the early Cambrian. At that time, these receptors had less specificity for their canonical ligands than their descendents in mammals have, which raises the question of how specificity for responses to different steroids was regulated. We propose that hydroxysteroid dehydrogenases that metabolized functional groups at different sites on steroids (e.g. C3, C11, C17 and C20) had a key role in providing specificity for steroid regulation of gene transcription in primitive vertebrates. Later, with increased physiological complexity in land animals due to innovations such as the placenta, hydroxysteroid dehydrogenases were recruited for new roles in regulating steroid-mediated physiological responses. Hydroxysteroid dehydrogenases in fish, amphibia and mammals are likely have different affinities for some xenobiotics, which needs to be considered in evaluating their hazards as endocrine disruptors.