Updated project metadata. RNA editing by adenosine deamination is well-positioned to diversify proteomes, but it is infrequently used for this purpose. Recent reports have suggested that squid may be an exception. We show that extensive recoding by RNA editing is an invention of the behaviorally sophisticated coleoid cephalopods, with tens of thousands of evolutionarily conserved sites. Editing is enriched in the nervous system and targets excitability and neuronal morphology. Many edited codons are translated into protein and in some cases cause functional changes. The genomic sequence flanking these sites is highly conserved to maintain the structures required for editing, suggesting that the process confers a selective advantage. Due to the large number of sites, the surrounding conservation greatly reduces the number of mutations and genomic polymorphisms that accumulate in protein coding regions. This trade-off between genome evolution and transcriptome plasticity highlights the importance of RNA recoding as a novel strategy for neural complexity.