Diversification of effector function, driven by a co-evolutionary arms race, enables pathogens to establish compatible interactions with their hosts. Structurally conserved plant pathogenesis-related PR-1 and PR-1-like (PR-1L) proteins are involved in plant defense and fungal virulence, respectively. It is unclear how fungal PR-1L counteracts plant defense. Here, we show that Ustilago maydis UmPR-1La and yeast ScPRY1 with conserved phenolic detoxification functions are Ser/Thr-rich region-mediated cell-surface localization proteins. However, UmPR-1La has gained additional specialized activity in eliciting hyphal-like formation, suggesting that U. maydis deploys UmPR-1La to sense phenolics and direct their growth in plants. U. maydis also hijacks plant cathepsin B-like 3 (CatB3) to release functional CAPE-like peptides after cleaving a conserved CNYD motif of UmPR-1La to subvert plant immunity for promoting fungal virulence. Surprisingly, CatB3 avoids cleavage of plant PR-1s, despite the presence of the same conserved CNYD motif. Our work highlights that UmPR-1La has acquired additional dual roles to suppress plant defense and sustain the infection process of fungal pathogens.