During land plant evolution, determinate spore-bearing axes (retained in extant bryophytes such as mosses) were progressively transformed into indeterminate branching shoots with specialized reproductive axes that form flowers. The LEAFY transcription factor, which is required for the first zygotic cell division in mosses and primarily for floral meristem identity in flowering plants, may have facilitated developmental innovations during these transitions. Mapping the LEAFY evolutionary trajectory has been challenging, however, because there is no functional overlap between mosses and flowering plants, and no functional data from intervening lineages. Here, we report a transgenic analysis in the fern Ceratopteris richardii that reveals a role for LEAFY in maintaining cell divisions in the apical stem cells of both haploid and diploid phases of the lifecycle. These results support an evolutionary trajectory in which an ancestral LEAFY module that promotes cell proliferation was progressively co-opted, adapted and specialized as novel shoot developmental contexts emerged.