The genetic and biophysical mechanisms by which new protein functions evolve is a central question in evolutionary biology, biochemistry, and biophysics. Of particular interest is whether major shifts in protein function are caused by a few mutations of large effect and, if they are, the mechanisms that mediate these changes. Here we combine ancestral protein reconstruction with genetic manipulation and explicit studies of protein structure and dynamics to dissect an ancient and discrete shift in ligand specificity in the steroid receptors, a family of biologically essential hormone-controlled transcription factors. We previously found that the ancestor of the entire steroid receptor family was highly specific for estrogens, but its immediate phylogenetic descendant was sensitive only to androgens, progestogens, and corticosteroids. Here we show that this shift in function was driven primarily by two historical amino acid changes, which caused a ∼70,000-fold change in the ancestral protein's specificity. These replacements subtly changed the chemistry of two amino acids, but they dramatically reduced estrogen sensitivity by introducing an excess of interaction partners into the receptor/estrogen complex, inducing a frustrated ensemble of suboptimal hydrogen bond networks unique to estrogens. This work shows how the protein's architecture and dynamics shaped its evolution, amplifying a few biochemically subtle mutations into major shifts in the energetics and function of the protein.