Genes of the family PHOSPHATIDYLETHANOLAMINE-BINDING PROTEINS (PEBP) have been intensely studied in plants for their role in cell (re)programming and meristem differentiation. Recently, sporadic reports of the presence of a new type of PEBP in plants became available, highly similar to the YY-PEBPs of prokaryotes. A comprehensive investigation of their spread, origin, and function revealed conservation across the plant kingdom. The YY-PEBP clade in plants seems to have resulted from a single Horizontal Gene Transfer (HGT) episode from a prokaryotic organism to an ancestral streptophyte. YY-PEBPs are also present in other eukaryotes, such as certain fungi, diatoms, and rotifers, and these cases derive from independent HGT events. Reciprocally, the occurrence of the eukaryotic CETS/RKIP type PEBPs (CR-PEBPs) was noticed in bacteria of the genus Nocardia, showing that HGT has occurred as well from eukaryotes to prokaryotes. Based on these observations, we propose that the current model of the PEBP family in plants needs to be updated with the clade STEPMOTHER OF FT AND TFL1 (SMFT). SMFT genes not only share high sequence conservation but also show specific expression in homologous plant structures that serve as propagules. Functional analysis of Arabidopsis smft mutant lines pointed to a function for this gene in regulating seed germination, both concerning primary dormancy release and in response to adverse high-temperature conditions. Overall, our study reveals an increasing complexity in the evolutionary history of the PEBP gene family, unlocking new potential in understanding the evolution and functional spectrum of these important key regulatory genes.