Testicular descent is a unique physiological adaptation found in therian mammals allowing optimal spermatogenesis below core body temperature. Recent studies show that INSL3, produced by Leydig cells, and its receptor LGR8 (RXFP2) are essential for mediating the transabdominal phase of testicular descent during early development. However, the origin and genetic basis for this physiological adaptation is not clear. Using syntenic mapping and the functional characterization of contemporary and resurrected relaxin family hormones, we show that derivation of INSL3-mediated testicular descent involved the duplication of an ancestral RLN3-like gene that encodes an indiscriminate ligand for LGR7 (RXFP1) and LGR8. This event was followed by acquisition of the LGR7-selective characteristics by a daughter gene (RLN3) prior to the evolution of the common ancestor of monotremes, marsupials, and placentals. A subsequent mutation of the other daughter gene (INSL3) occurred before the emergence of therian mammals, which then led to the derivation of the reciprocal LGR8-specific characteristics of INSL3. The stepwise evolution of these independent signaling pathways through gene duplication and subsequent divergence is consistent with Darwinian theory of selection and adaptation, and the temporal proximity suggests an association between these genetic events and the concurrent evolution of testicular descent in ancestral therian mammals.