Abstract The sea anemone Nematostella vectensis (Anthozoa, Cnidaria) is a powerful model system for characterizing the evolution of genes functioning in venom and nervous systems. Despite being an example for evolutionary novelty, the evolutionary origin of most toxins remains unknown. Here we report the first bona fide case of protein recruitment from the cnidarian nervous to venom system. The ShK-like1 peptide has ShKT cysteine motif, is lethal for fish larvae and packaged into nematocysts, the cnidarian venom-producing stinging capsules. Thus, ShK-like1 is a toxic venom component. Its paralog, ShK-like2, is a neuropeptide localized to neurons and is involved in development. Interestingly, both peptides exhibit similarities in their functional activities: both of them provoke contraction in Nematostella polyps and are toxic to fish. Because ShK-like2 but not ShK-like1 is conserved throughout sea anemone phylogeny, we conclude that the two paralogs originated due to a Nematostella -specific duplication of a ShK-like2 ancestor, a neuropeptide-encoding gene, followed by diversification and partial functional specialization. Strikingly, ShK-like2 is represented by two gene isoforms controlled by alternative promoters conferring regulatory flexibility throughout development. Additionally, we characterized the expression patterns of four other peptides with structural similarities to studied venom components, and revealed their unexpected neuronal localization. Thus, we employed genomics, transcriptomics and functional approaches to reveal one new venom component, five neuropeptides with two different cysteine motifs and an evolutionary pathway from nervous to venom system in Cnidaria.