Aldehyde dehydrogenases (ALDHs) catabolize toxic aldehydes and process the vitamin A-derived retinaldehyde into retinoic acid (RA), a small diffusible molecule and a pivotal chordate morphogen. In this study, we combine phylogenetic, structural, genomic, and developmental gene expression analyses to examine the evolutionary origins of ALDH substrate preference. Structural modeling reveals that processing of small aldehydes, such as acetaldehyde, by ALDH2, versus large aldehydes, including retinaldehyde, by ALDH1A is associated with small versus large substrate entry channels (SECs), respectively. Moreover, we show that metazoan ALDH1s and ALDH2s are members of a single ALDH1/2 clade and that during evolution, eukaryote ALDH1/2s often switched between large and small SECs after gene duplication, transforming constricted channels into wide opened ones and vice versa. Ancestral sequence reconstructions suggest that during the evolutionary emergence of RA signaling, the ancestral, narrow-channeled metazoan ALDH1/2 gave rise to large ALDH1 channels capable of accommodating bulky aldehydes, such as retinaldehyde, supporting the view that retinoid-dependent signaling arose from ancestral cellular detoxification mechanisms. Our analyses also indicate that, on a more restricted evolutionary scale, ALDH1 duplicates from invertebrate chordates (amphioxus and ascidian tunicates) underwent switches to smaller and narrower SECs. When combined with alterations in gene expression, these switches led to neofunctionalization from ALDH1-like roles in embryonic patterning to systemic, ALDH2-like roles, suggesting functional shifts from signaling to detoxification.