Despite the extraordinary significance leaves have for life on Earth, their origin and development remain vigorously debated. More than a century of paleobotanical, morphological, and phylogenetic research has still not resolved fundamental questions about leaves. Developmental genetic data are sparse in ferns, and comparative studies of lycophytes and seed plants have reached opposing conclusions on the conservation of a leaf developmental program. We performed phylogenetic and expression analyses of a leaf developmental regulator (Class III HD-Zip genes; C3HDZs) spanning lycophytes and ferns. We show that a duplication and neofunctionalization of C3HDZs probably occurred in the ancestor of euphyllophytes, and that there is a common leaf developmental mechanism conserved between ferns and seed plants. We show C3HDZ expression in lycophyte and fern sporangia and show that C3HDZs have conserved expression patterns during initiation of lateral primordia (leaves or sporangia). This expression is maintained throughout sporangium development in lycophytes and ferns and indicates an ancestral role of C3HDZs in sporangium development. We hypothesize that there is a deep homology of all leaves and that a sporangium-specific developmental program was coopted independently for the development of lycophyte and euphyllophyte leaves. This provides molecular genetic support for a paradigm shift in theories of lycophyte leaf evolution.