Heterotypy is now recognized as a generative force in the formation of new proteins through modification of existing proteins. We report that heterotypy in the N-terminal region of the mature growth/differentiation factor 5 (GDF5) protein occurred during evolution of teleosts. N-terminal length variation of GDF5 was found among teleost interfamilies and interorders but not within teleost families or among tetrapods. We further show that increase of proline and glutamine to the N-terminal region of mature GDF5 occurred in Eurypterygii, the higher lineage of teleosts. Because the basic amino acids, believed to control diffusion, are conserved in this region across all species examined, we suggest that the N-terminal elongation of the mature GDF5 protein during evolution has altered the protein diffusion in Eurypterygii, leading to high concentrations of the protein in the joint of the pharyngeal skeleton, the location of cartilage formation during development.