The human genome is scattered with repetitive sequences, and the ENCODE project revealed that 60–70% of the genomic DNA is transcribed into RNA. As a consequence, the human transcriptome contains a large portion of repeat-derived RNAs (repRNAs). Here, we present a hypothesis for the evolution of novel functional repeat-derived RNAs from non-coding RNAs (ncRNAs) by retrotransposition. Upon amplification, the ncRNAs can diversify in sequence and subsequently evolve new activities, which can result in novel functions. Non-coding transcripts derived from highly repetitive regions can therefore serve as a reservoir for the evolution of novel functional RNAs. We base our hypothetical model on observations reported for short interspersed nuclear elements derived from 7SL RNA and tRNAs, α satellites derived from snoRNAs and SL RNAs derived from U1 small nuclear RNA. Furthermore, we present novel putative human repeat-derived ncRNAs obtained by the comparison of the Dfam and Rfam databases, as well as several examples in other species. We hypothesize that novel functional ncRNAs can derive also from other repetitive regions and propose Genomic SELEX as a tool for their identification.