The genomic locus on mouse chromosome 13 called Regulator of sex-limitation (Rsl) accentuates sex differences in hepatic gene expression. Females homozygous for variant rsl alleles express some otherwise male-specific liver proteins, such as sex-limited protein (Slp), major urinary proteins (MUPs), and members of the cytochrome P450 (cyp) 2d subfamily. We recently identified mutations in two genes, Rsl1 and Rsl2, accounting for the rsl phenotype. These genes encode KRAB zinc-finger proteins (KRAB-ZFPs) and are embedded within a cluster of over 20 similar genes. Mammalian genomes contain over 200 KRAB-ZFP genes, which act biochemically to repress transcription, but the Rsl genes are the first to have their biological functions elucidated. Here we compare Rsl1 and Rsl2 with their neighboring genes, tracing a series of duplication, inversion, and gene conversion events that have created subfamilies within the locus. Polymorphisms among inbred mouse strains and feral species suggest that mutations responsible for the rsl phenotype arose during the creation of inbred strains. Comparisons among mouse, rat, and human sequences show that the Rsl genes, like members of certain other multigene families, have diversified in a species-specific manner. The targets of Rsl regulation also vary between species, occurring in gene families with functions in steroid and xenobiotic metabolism (Cyp2d), reproduction (MUPs), and immunity (Slp). This suggests that the Rsl locus in mouse, and comparable KRAB-ZFP genes in other mammals, may play a role in speciation via modulation of expression of genes influencing reproductive fitness or behavior.