Land plants evolved more than 450 million years ago from a lineage of freshwater charophyte green algae(1). The extent to which plant signalling systems existed before the evolutionary transition to land is unknown. Although charophytes occupy a key phylogenetic position for elucidating the origins of such signalling systems(2-4), there is a paucity of sequence data for these organisms(5,6). Here we carry out de novo transcriptomics of five representative charophyte species, and find putative homologues for the biosynthesis, transport, perception and signalling of major plant hormones. Focusing on the plant hormone ethylene, we provide evidence that the filamentous charophyte Spirogyra pratensis possesses an ethylene hormone system homologous to that in plants. Spirogyra produces ethylene and exhibits a cell elongation response to ethylene. Spirogyra ethylene-signalling homologues partially rescue mutants of the angiosperm Arabidopsis thaliana and respond post-translationally to ethylene when expressed in plant cells, indicative of unambiguously homologous ethylene-signalling pathways in Spirogyra and Arabidopsis. These findings imply that the common aquatic ancestor possessed this pathway prior to the colonization of land and that cell elongation was possibly an ancestral ethylene response. This highlights the importance of charophytes for investigating the origins of fundamental plant processes.