Transgenic animal models have played an important role in elucidating gene functions and the molecular basis development, physiology, behavior, and pathogenesis. Transgenic models have been so successful that they have become a standard tool in molecular genetics and biomedical studies and are being used to fulfill one of the main goals of the post-genomic era: to assign functions to each gene in the genome. However, the assumption that gene functions and genetic systems are conserved between models and humans is taken for granted, often in spite of evidence that gene functions and networks diverge during evolution. In this review, I discuss some mechanisms that generate functional divergence and highlight recent examples demonstrating that gene functions and regulatory networks diverge through time. These examples suggest that annotation of gene functions based solely on mutant phenotypes in animal models, as well as assumptions of conserved functions between species, can be wrong. Therefore, animal models of gene function and human disease may not provide appropriate information, particularly for rapidly evolving genes and systems.