The availability of multiple teleost (bony fish) genomes is providing unprecedented opportunities to understand the diversity and function of gene duplication events using comparative genomics. Here we describe the cloning and functional characterization of two novel vitamin D receptor (VDR) paralogs from the freshwater teleost medaka (Oryzias latipes). VDR sequences were identified through mining of the medaka genome database where gene organization and structure was determined. Two distinct VDR genes were identified in the medaka genome and mapped to defined loci. Each VDR sequence exhibits unique intronic organization and dissimilar 5' UTRs, suggesting they are not isoforms of the same gene locus. Phylogenetic comparison with additional teleosts and mammalian VDR sequences illustrate that two distinct clusters are formed separating aquatic and terrestrial species. Nested within the teleost cluster are two separate clades for VDR and VDR. The topology of teleost VDR sequences is consistent with the notion of paralogous genes arising from a whole genome duplication event prior to teleost radiation. Functional characterization was conducted through the development of VDR expression vectors including Gal4 chimeras containing the yeast Gal4 DNA binding domain (DBD) fused to the medaka VDR ligand binding domain (LBD) and full-length protein. The common VDR ligand 1,25(OH)₂D₃ resulted in significant transactivation activity with both the Gal4 and full-length constructs of mVDR. Comparatively, transactivation of mVDR with 1,25(OH)₂D₃ was highly attenuated suggesting a functional divergence between these two NR paralogs. We additionally demonstrate through coactivator studies that mVDR is still functional however exhibits a different sensitivity to 1,25(OH)₂D₃ compared to VDR. These results suggest that in medaka VDR and VDR have under gone a functional divergence through a process of sub and/or neofunctionalization of VDR nuclear receptor gene pairs.