Auxin is a major developmental regulator in plants and the acquisition of a transcriptional response to auxin likely contributed to developmental innovations at the time of water-to-land transition. Auxin Response Factors (ARFs) Transcription Factors (TFs) that mediate auxin-dependent transcriptional changes are divided into A, B and C evolutive classes in land plants. The origin and nature of the first ARF proteins in algae is still debated. Here, we identify the most 'ancient' ARF homologue to date in the early divergent charophyte algae Chlorokybus atmophyticus, CaARF. Structural modelling combined with biochemical studies showed that CaARF already shares many features with modern ARFs: it is capable of oligomerization, interacts with the TOPLESS co-repressor and specifically binds Auxin Response Elements as dimer. In addition, CaARF possesses a DNA-binding specificity that differs from class A and B ARFs and that was maintained in class C ARF along plants evolution. Phylogenetic evidence together with CaARF biochemical properties indicate that the different classes of ARFs likely arose from an ancestral proto-ARF protein with class C-like features. The foundation of auxin signalling would have thus happened from a pre-existing hormone-independent transcriptional regulation together with the emergence of a functional hormone perception complex.