The RAG1 and RAG2 proteins together initiate V(D)J recombination by performing cleavage of chromosomal DNA adjacent to antigen receptor gene segments. Like the adaptive immune system itself, RAG1 and RAG2 are found only in jawed vertebrates. The hypothesis that RAG1 and RAG2 arose in evolution as components of a transposable element has received dramatic support from our recent finding that the RAG proteins are a fully functional transposase in vitro. This result strongly suggests that antigen receptor genes acquired their unusual structure as a consequence of the insertion of a transposable element into an ancestral receptor gene by RAG1 and RAG2 approx 450 million years ago.