Horizontal gene transfer events have played a major role in the evolution of microbial species, but their importance in animals is less clear. Here, we report horizontal gene transfer of cytolethal distending toxin B (cdtB), prokaryotic genes encoding eukaryote-targeting DNase I toxins, into the genomes of vinegar flies (Diptera: Drosophilidae) and aphids (Hemiptera: Aphididae). We found insect-encoded cdtB genes are most closely related to orthologs from bacteriophage that infect Candidatus Hamiltonella defensa, a bacterial mutualistic symbiont of aphids that confers resistance to parasitoid wasps. In drosophilids, cdtB orthologs are highly expressed during the parasitoid-prone larval stage and encode a protein with ancestral DNase activity. We show that cdtB has been domesticated by diverse insects and hypothesize that it functions in defense against their natural enemies.