Various explanations have been proposed to account for complex differentiation and development in humans, despite the human genome containing only two to three times the number of genes in invertebrates. Ignored are the actions of adrenal and sex steroids—androgens, estrogens, glucocorticoids, mineralocorticoids, and progestins—which act through receptors that arose from an ancestral nuclear receptor in a protochordate. This ligand‐based mechanism is unique to vertebrates and was integrated into the already robust network of transcription factors in invertebrates. Adrenal and sex steroids (...) influence almost all aspects of vertebrate differentiation and development. I propose that evolution of this ligand‐based mechanism in a primitive vertebrate was an important contribution to vertebrate complexity. Sequencing of genomes from a cephalochordate, such as amphioxus, and from hagfish and lamprey will establish early events in the evolution of steroid hormone signaling, and also allow genetic studies to elucidate how vertebrate complexity depends on steroid hormones. BioEssays 25:396–400, 2003. © 2003 Wiley Periodicals, Inc. (shrink)