Flavohemoglobins are the main detoxifiers of nitric oxide (NO) in bacteria and fungi and are induced in response to nitrosative stress. In fungi, the flavohemoglobin encoding gene YHB1 is positively regulated by transcription factors which are activated upon NO exposure. In this study, we show that in the model yeast Saccharomyces cerevisiae and in the human pathogen Candida glabrata, the transcription factor Yap7 constitutively represses YHB1 by binding its promoter. Consequently, YAP7 deletion conferred high NO resistance to the cells. Co-immunoprecipitation experiments and mutant analyses indicated that Yap7 represses YHB1 by recruiting the transcriptional repressor Tup1. In S. cerevisiae, YHB1 repression also involves interaction of Yap7 with the Hap2/3/5 complex through a conserved Hap4-like-bZIP domain, but this interaction has been lost in C. glabrata. The evolutionary origin of this regulation was investigated by functional analyses of Yap7 and of its paralogue Yap5 in different yeast species. These analyses indicated that the negative regulation of YHB1 by Yap7 arose by neofunctionalization after the whole genome duplication which led to the C. glabrata and S. cerevisiae extant species. This work describes a new aspect of the regulation of fungal nitric oxidase and provides detailed insights into its functioning and evolution.