Our recent finding that the Candida albicans RNase III enzyme CaDcr1 is an unusual, multifunctional RNase III coupled with data on the RNase III enzymes from other fungal species prompted us to seek a model that explained the evolution of RNase III's in modern budding yeast species. CaDcr1 has both dicer function (generates small RNA molecules from dsRNA precursors) and Rnt1 function, (catalyzes the maturation of 35S rRNA and U4 snRNA). Some budding yeast species have two distinct genes that encode these functions, a Dicer and RNT1, whereas others have only an RNT1 and no Dicer. As none of the budding yeast species has the canonical Dicer found in many other fungal lineages and most eukaryotes, the extant species must have evolved from an ancestor that lost the canonical Dicer, and evolved a novel Dicer from the essential RNT1 gene. No single, simple model could explain the evolution of RNase III enzymes from this ancestor because existing sequence data are consistent with two equally plausible models. The models share an architecture for RNase III evolution that involves gene duplication, loss, subfunctionalization, and neofunctionalization. This commentary explains our reasoning, and offers the prospect that further genomic data could further resolve the dilemma surrounding the budding yeast RNase III's evolution.