Tudor domain-containing proteins (Tudor proteins), which recognize and bind to methyl-arginine/lysine residues, play important roles in diverse epigenetics, gene expression and the regulation of various small RNAs. Using the complete set of 23 Tudor proteins from Drosophila, together with the available functional information, we propose a putative link for different types of Tudor domains (histone-binding, SMN and SND1) and the four functional groups of Tudor proteins (Group 1, binding the methyl-lysine/arginine of histone tails; Group 2, binding the methyl-RG/RA box of ligand; Group 3, binding the methyl-RG/RA box of microRNPs; and Group 4, binding the methyl-RG/RA box of PIWI proteins). Tudor domain types are distinguished by the nature of the sequence flanking the canonical Tudor domains. Sequence analysis indicates that Tudor domains experienced stepwise transit from one type to another during evolution. Tudor proteins of Group 4, collectively representing the great majority of Tudor proteins in Drosophila, are characterized by multiple Tudor domain repeats, which might be required for associating with several molecules of the same germ granule components. Tudor domain, a segment of approximately 60 amino acid residues, has been found in fungi, protozoa, unicellular eukaryota, plants and metazoa but not in the Guillardia theta nucleomorph. Similar frequencies of Tudor-containing genes (Tudor genes) among vertebrates and the frequent occurrence of orthologues among vertebrates, along with similar observations within arthropods suggest that Tudor genes are inherited largely vertically during evolution within different phylogenetic lineages.