L1 is the most proliferative autonomous retroelement that comprises about 20% of mammalian genomes. Why L1s have proliferated so extensively in mammalian genomes is an important yet unsolved question. L1 copies are amplified via retrotransposition, in which the DNA cleavage specificity by the L1-encoded endonuclease (EN) primarily dictates sites of insertion. Whereas mammalian L1s show target preference for 5'-TTAAAA-3', other L1-like elements exhibit various degrees of target specificity. To gain insights on diversification of the EN specificity during L1 evolution, ENs of zebrafish L1 elements were analyzed here. We revealed that they form 3 discrete clades, M, F, and Tx1, which is in stark contrast to a single L1 clade in mammalian species. Interestingly, zebrafish clade M elements cluster as a sister group of mammalian L1s and show target-site preference for 5'-TTAAAA-3'. In contrast, elements of the clade F, the immediate outgroup of the clade M, show little specificity. We identified certain clade-specific amino acid residues in EN, many of which are located in the cleft that recognizes the substrate, suggesting that these amino acid alterations have generated 2 types of ENs with different substrate specificities. The distribution pattern of the 3 clades suggests a possibility that the acquisition of target specificity by the L1 ENs improved the L1 fitness under the circumstances in mammalian hosts.