Prior and extensive plastic rewiring of a transcriptional network, followed by a functional switch of the conserved transcriptional regulator, can shape the evolution of a new network with diverged functions. The presence of three distinct iron regulatory systems in fungi that use orthologous transcriptional regulators suggests that these systems evolved in that manner. Orthologs of the transcriptional activator Sef1 are believed to be central to how iron regulatory systems developed in fungi, involving gene gain, plastic network rewiring, and switches in regulatory function. We show that, in the protoploid yeast Lachancea kluyveri, plastic rewiring of the L. kluyveri Sef1 (Lk-Sef1) network, together with a functional switch, enabled Lk-Sef1 to regulate TCA cycle genes, unlike Candida albicans Sef1 that mainly regulates iron-uptake genes. Moreover, we observed pervasive non-functional binding of Sef1 to its target genes. Enhancing Lk-Sef1 activity resuscitated the corresponding transcriptional network, providing immediate adaptive benefits in changing environments. Our study not only sheds light on the evolution of Sef1-centered transcriptional networks, but also shows the adaptive potential of non-functional transcription factor binding for evolving phenotypic novelty and diversity.