ABC transporters are ancient and ubiquitous nutrient transport systems in bacteria and play a central role in defining lifestyles. Periplasmic solute-binding proteins (SBPs) are components that deliver ligands to their translocation machinery. SBPs have diversified to bind a wide range of ligands with high specificity and affinity. However, accurate assignment of cognate ligands remains a challenging problem in SBPs. Urea metabolism plays an important role in the nitrogen cycle; anthropogenic sources account for more than half of global nitrogen fertilizer. We report identification of urea-binding proteins within a large SBP sequence family that encodes diverse functions. By combining genetic linkage between SBPs, ABC transporter components, enzymes or transcription factors, we accurately identified cognate ligands, as we verified experimentally by biophysical characterization of ligand binding and crystallographic determination of the urea complex of a thermostable urea-binding homolog. Using three-dimensional structure information, these functional assignments were extrapolated to other members in the sequence family lacking genetic linkage information, which revealed that only a fraction bind urea. Using the same combined approaches, we also inferred that other family members bind various short-chain amides, aliphatic amino acids (leucine, isoleucine, valine), γ-aminobutyrate, and as yet unknown ligands. Comparative structural analysis revealed structural adaptations that encode diversification in these SBPs. Systematic assignment of ligands to SBP sequence families is key to understanding bacterial lifestyles, and also provides a rich source of biosensors for clinical and environmental analysis, such as the thermostable urea-binding protein identified here.