The RFX protein family includes members from yeast to humans, which function in various biological systems, and share a DNA-binding domain and a conserved C-terminal region. In the human transcription regulator RFX1, the conserved C terminus is an independent functional domain, which mediates dimerization and transcriptional repression. This dimerization domain has a unique ability to mediate the formation of two alternative homodimeric DNA-protein complexes, the upper of which has been linked to repression. Here, we localize the complex formation capacity to several different RFX1 C-terminal subregions, each of which can function independently to generate the upper complex and repress transcription, thus correlating complex formation with repression. To gain an evolutionary perspective, we have examined whether the different properties of the RFX1 C terminus exist in the two yeast RFX proteins, which are involved in signaling pathways. Replacement of the RFX1 C terminus with those of Sak1 and Crt1, its orthologues from Schizosaccharomyces pombe and Saccharomyces cerevisiae, respectively, and analysis of fusions with the Gal4 DNA-binding domain, revealed that the ability to generate the two alternative complexes is conserved in the RFX family, from S. cerevisiae to man. While sharing this unique biochemical property, the three C termini differed from each other in their ability to mediate dimerization and transcriptional repression. In both functions, RFX1, Sak1, and Crt1 showed high capacity, moderate capacity, and no capacity, respectively. This comparative analysis of the RFX proteins, representing different evolutionary stages, suggests a gradual development of the conserved C terminus, from the appearance of the ancestral motif (Crt1), to the later acquisition of the dimerization/repression functions (Sak1), and finally to the enhancement of these functions to generate a domain mediating highly stable protein-protein interactions and potent transcriptional repression (RFX1).