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.