Signal transduction proteins are often multi-domain proteins that arose through the fusion of previously independent proteins. How such a change in the spatial arrangement of proteins impacts their evolution and the selective pressures acting on individual residues is largely unknown. We explored this problem in the context of bacterial two-component signalling pathways, which typically involve a sensor histidine kinase that specifically phosphorylates a single cognate response regulator. Although usually found as separate proteins, these proteins are sometimes fused into a so-called hybrid histidine kinase. Here, we demonstrate that the isolated kinase domains of hybrid kinases exhibit a dramatic reduction in phosphotransfer specificity in vitro relative to canonical histidine kinases. However, hybrid kinases phosphotransfer almost exclusively to their covalently attached response regulator domain, whose effective concentration exceeds that of all soluble response regulators. These findings indicate that the fused response regulator in a hybrid kinase normally prevents detrimental cross-talk between pathways. More generally, our results shed light on how the spatial properties of signalling pathways can significantly affect their evolution, with additional implications for the design of synthetic signalling systems.