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Demosponges are considered part of the most basal evolutionary lineage in the animal kingdom. Although the sponge body plan fundamentally differs from that of other metazoans, their development includes many of the hallmarks of bilaterian and eumetazoan embryogenesis, namely fertilization followed by a period of cell division yielding distinct cell populations, which through a gastrulation-like process become allocated into different cell layers and patterned within these layers. These observations suggest that the last common ancestor (LCA) to all living animals was developmentally more sophisticated than is widely appreciated and used asymmetric cell division and morphogen gradients to establish localized populations of specified cells within the embryo. Here we demonstrate that members of a range of transcription factor gene classes, many of which appear to be metazoan-specific, are expressed during the development of the demosponge Reniera, including ANTP, Pax, POU, LIM-HD, Sox, nuclear receptor, Fox (forkhead), T-box, Mef2, and Ets genes. Phylogenetic analysis of these genes suggests that not only the origin but the diversification of some of the major developmental metazoan transcription factor classes took place before sponges diverged from the rest of the Metazoa. Their expression during demosponge development suggests that, as in today's sophisticated metazoans, these genes may have functioned in the regulatory network of the metazoan LCA to control cell specification and regionalized gene expression during embryogenesis.