The nuclear receptor FXR (NR1H4) plays a pivotal role in maintaining bile salt and lipid homeostasis by functioning as a bile salt sensor in mammals. In contrast, FXR (NR1H5) from mouse is activated by lanosterol, and does not share common ligands with FXR. To further elucidate FXR ligand/receptor and structure/function relationships, we characterized an 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 FXR. There is an extra sequence in the middle of the sFxr ligand binding domain (LBD) when compared to the LBD of FXR. Luciferase reporter assays demonstrated that sFxr responds weakly to scymnol sulfate, bile salts, and synthetic FXR ligands, in striking difference from human FXR (hFXR). Interestingly, all trans-retinoic acid was capable of trans-activating both hFXR and sFxr. When the extra amino acids in the sFxr LBD were deleted and replaced with the corresponding sequence from hFXR, 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 FXR 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.