Land plants are considered monophyletic, descending from a single successful colonization of land by an aquatic algal ancestor. The ability to survive dehydration to the point of desiccation is a key adaptive trait enabling terrestrialization. In extant land plants, desiccation tolerance depends on the action of the hormone abscisic acid (ABA) that acts through a receptor-signal transduction pathway comprising a PYRABACTIN RESISTANCE 1-like (PYL)–PROTEIN PHOSPHATASE 2C (PP2C)–SNF1-RELATED PROTEIN KINASE 2 (SnRK2) module. Early-diverging aeroterrestrial algae mount a dehydration response that is similar to that of land plants, but that does not depend on ABA: Although ABA synthesis is widespread among algal species, ABA-dependent responses are not detected, and algae lack an ABA-binding PYL homolog. This raises the key question of how ABA signaling arose in the earliest land plants. Here, we systematically characterized ABA receptor-like proteins from major land plant lineages, including a protein found in the algal sister lineage of land plants. We found that the algal PYL-homolog encoded by Zygnema circumcarinatum has basal, ligand-independent activity of PP2C repression, suggesting this to be an ancestral function. Similarly, a liverwort receptor possesses basal activity, but it is further activated by ABA. We propose that co-option of ABA to control a preexisting PP2C-SnRK2-dependent desiccation-tolerance pathway enabled transition from an all-or-nothing survival strategy to a hormone-modulated, competitive strategy by enabling continued growth of anatomically diversifying vascular plants in dehydrative conditions, enabling them to exploit their new environment more efficiently. © 2019 National Academy of Sciences. All rights reserved.