Auxin homeostasis is tightly regulated by several mechanisms, including conjugation of the hormone to specific moieties, such as amino acids or sugar. The inactive phytohormone conjugate is stored in large pools in plants and hydrolyzed to regain full activity. Many conjugate hydrolases (M20D metallopeptidases) have been identified and characterized throughout the plant kingdom. We have traced this regulatory gene family back to liverwort (Marchantia polymorpha), a member of the most ancient extant land plant lineage, which emerged approximately 475 million years ago. We have isolated and characterized a single hydrolase homologue, dubbed M. polymorpha IAA-Leucine Resistant1 (MpILR1), from liverwort. MpILR1 can hydrolyze two auxin (indole acetic acid [IAA]) substrates (IAA-Leucine and IPA-Alanine) at very low levels of activity, but it cannot hydrolyze the two native auxin conjugates of liverwort (IAA-Glycine and IAA-Valine). We conclude from these results that liverwort likely does not employ active auxin conjugate hydrolysis as a regulatory mechanism and that conjugate homeostasis likely takes place in liverwort by passive background degradation. Furthermore, we present evidence that MpILR1 was probably exapted by tra-cheophytes over evolutionary time into the auxin regulatory pathway.