Selenoproteins are a diverse group of proteins containing selenocysteine (Sec)-the twenty-first amino acid-incorporated during translation via a unique recoding mechanism1,2. Selenoproteins fulfil essential roles in many organisms1, yet are not ubiquitous across the tree of life3-7. In particular, fungi were deemed devoid of selenoproteins4,5,8. However, we show here that Sec is utilized by nine species belonging to diverse early-branching fungal phyla, as evidenced by the genomic presence of both Sec machinery and selenoproteins. Most fungal selenoproteins lack consensus Sec recoding signals (SECIS elements9) but exhibit other RNA structures, suggesting altered mechanisms of Sec insertion in fungi. Phylogenetic analyses support a scenario of vertical inheritance of the Sec trait within eukaryotes and fungi. Sec was then lost in numerous independent events in various fungal lineages. Notably, Sec was lost at the base of Dikarya, resulting in the absence of selenoproteins in Saccharomyces cerevisiae and other well-studied fungi. Our results indicate that, despite scattered occurrence, selenoproteins are found in all kingdoms of life.