Nearly all eukaryotes carry DNA transposons of the Robertson's Mutator (Mu) superfamily, a widespread source of genome instability and genetic variation. Despite their pervasive impact on host genomes, much remains unknown about the evolution of these transposons. Transposase recognition of terminal inverted repeats (TIRs) is thought to drive and constrain coevolution of MuDR transposase genes and TIRs. To address the extent of this relationship and its impact, we compared separate phylogenies of TIRs and MuDR gene sequences from Mu elements in the maize genome. Five major clades were identified. As expected, most Mu elements were bound by highly similar TIRs from the same clade (homomorphic type). However, a subset of elements contained dissimilar TIRs derived from divergent clades. These "heteromorphs" typically occurred in multiple copies indicating active transposition in the genome. In addition, analysis of internal sequences showed that exchanges between elements having divergent TIRs produced new mudra and mudrb gene combinations. In several instances, TIR homomorphs had been regenerated within a heteromorph clade with retention of distinctive internal MuDR sequence combinations. Results reveal that recombination between divergent clades facilitates independent evolution of transposase (mudra), transposase-binding targets (TIRs), and capacity for insertion (mudrb) of active Mu elements. This mechanism would be enhanced by the preference of Mu insertions for recombination-rich regions near the 5' ends of genes. We suggest that cycles of recombination give rise to alternating homo- and heteromorph forms that enhance the diversity on which selection for Mu fitness can operate.