Adaptive evolution associated with dispensable gene loss is widespread in the animal kingdom. However, loss of genes essential for embryonic survival and the mechanisms that evolved to bypass negative selection and extinction are less well known. Here, we show that all Gadiformes, an ecologically dominant order of codfishes, lost the aqp1ab-type genes that are essential for the formation of hydrated pelagic eggs and embryonic survival of marine teleosts in oceanic environments. Despite such gene loss, codfishes produce some of the most highly hydrated pelagic eggs of all marine teleosts. To resolve this apparent paradox, we initially confirmed that the mechanisms of osmotic drive are conserved with other pelagic-egg-producing marine teleosts, and then conducted comparative transcript analyses of aquaporin water channels in distantly-related freshwater and marine teleosts. This uncovered Aqp4-type channels that have been chromosomally linked to the Aqp1-type channels in jawed vertebrate genomes for >450 million years as the primary candidates. Using immunolocalization, functional assays, and inhibition experiments with zebrafish and Atlantic cod as model organisms, we show that short isoforms of Aqp4 are required for egg ovulation in more ancestral lineages of freshwater teleosts and were recruited to the oocyte hydration pathway of codfishes. By contrast, the oldest and most modern lineages of marine teleosts producing pelagic eggs still utilize the aqp1ab genes for egg hydration. Our data thus reveal that codfishes survived essential gene loss by functionally co-opting freshwater ovulatory pathways to marine egg hydration.