IscB proteins are putative nucleases encoded in a distinct family of IS200/IS605 transposons and are likely ancestors of the RNA-guided endonuclease Cas9, but the functions of IscB and its interactions with any RNA remain uncharacterized. Using evolutionary analysis, RNA sequencing, and biochemical experiments, we reconstructed the evolution of CRISPR-Cas9 systems from IS200/IS605 transposons. We found that IscB uses a single noncoding RNA for RNA-guided cleavage of double-stranded DNA and can be harnessed for genome editing in human cells. We also demonstrate the RNA-guided nuclease activity of TnpB, another IS200/IS605 transposon-encoded protein and the likely ancestor of Cas12 endonucleases. This work reveals a widespread class of transposon-encoded RNA-guided nucleases, which we name OMEGA (obligate mobile element–guided activity), with strong potential for developing as biotechnologies.