Horizontal gene transfer (HGT), the movement and genomic integration of DNA across species boundaries, is commonly associated with bacteria and other microorganisms, but functional HGT (fHGT) is increasingly being recognized in heterotrophic parasitic plants that obtain their nutrients and water from their host plants through direct haustorial feeding. Here, in the holoparasitic stem parasite Cuscuta, we identify 108 transcribed and probably functional HGT events in Cuscuta campestris and related species, plus 42 additional regions with host-derived transposon, pseudogene and non-coding sequences. Surprisingly, 18 Cuscuta fHGTs were acquired from the same gene families by independent HGT events in Orobanchaceae parasites, and the majority are highly expressed in the haustorial feeding structures in both lineages. Convergent retention and expression of HGT sequences suggests an adaptive role for specific additional genes in parasite biology. Between 16 and 20 of the transcribed HGT events are inferred as ancestral in Cuscuta based on transcriptome sequences from species across the phylogenetic range of the genus, implicating fHGT in the successful radiation of Cuscuta parasites. Genome sequencing of C. campestris supports transfer of genomic DNA-rather than retroprocessed RNA-as the mechanism of fHGT. Many of the C. campestris genes horizontally acquired are also frequent sources of 24-nucleotide small RNAs that are typically associated with RNA-directed DNA methylation. One HGT encoding a leucine-rich repeat protein kinase overlaps with a microRNA that has been shown to regulate host gene expression, suggesting that HGT-derived parasite small RNAs may function in the parasite-host interaction. This study enriches our understanding of HGT by describing a parasite-host system with unprecedented gene exchange that points to convergent evolution of HGT events and the functional importance of horizontally transferred coding and non-coding sequences.