Vertebrate NCoR-family co-repressors play central roles in the timing of embryo and stem cell differentiation by repressing the activity of a range of transcription factors. They interact with nuclear receptors using short linear motifs (SLiMs) termed co-repressor for nuclear receptor (CoRNR) boxes. Here, we identify the pathway leading to increasing co-repressor diversity across the deuterostomes. The final complement of CoRNR boxes arose in an ancestral cephalochordate, and was encoded in one large exon; the urochordates and vertebrates then split this region between 10 and 12 exons. InXenopus, alternative splicing is prevalent in NCoR2, but absent in NCoR1. We show for one NCoR1 exon that alternative splicing can be recovered by a single point mutation, suggesting NCoR1 lost the capacity for alternative splicing. Analyses inXenopusand zebrafish identify that cellular context, rather than gene sequence, predominantly determines species differences in alternative splicing. We identify a pathway to diversity for the NCoR family beginning with the addition of a SLiM, followed by gene duplication, the generation of alternatively spliced isoforms and their differential deployment.