Despite their vital role as regulators of gene expression, the evolutionary origin of transcription factors (TFs) and the mechanisms by which new TFs evolve remain poorly understood. Some TFs evolved via transposase capture, the process by which transposases, the proteins that facilitate DNA transposon mobility, fuse to domains from host proteins, but the extent of this phenomenon and the events required remain unexplored. Here we use comparative genomics to characterize the frequency, composition, and function of host-transposase fusions (HTF) in the tetrapod lineage. We find that HTF is a recurrent evolutionary process that occurred at least 88 times during tetrapod evolution, primarily through alternative splicing. By analyzing the domain structure of HTFs, we also determined that HTF fusion in the tetrapod lineage occurs most commonly between the transcriptionally repressive KRAB domain and transposase DNA binding domains. We demonstrate that four KRAB-transposase fusions repress gene expression in a sequence-specific manner in reporter assays, consistent with a potential role as a TF. To further test this, we chose a bat-specific KRAB-transposase fusion, KRABINER, as our model. We performed precision run-on sequencing (PRO-seq) and Cleavage Under Targets and Release Using Nuclease (CUT&RUN) in KRABINER KO bat cells, engineered using CRISPR-Cas9, and KRABINER KO cells rescued with either wild-type or mutant KRABINER transgenes. We found that KRABINER regulates transcription of both genes and transcriptional regulatory elements, and that a subset of these changes is associated with KRABINER binding, confirming that KRABINER acts as a TF in bat cells. Transposase capture is thus a heretofore underappreciated mechanism to generate novel vertebrate TFs, and provides a plausible mechanism for the origin of several extant TFs.