The development of cells specialized for water conduction or support is a striking innovation of plants that has enabled them to colonize land. The NAC transcription factors regulate the differentiation of these cells in vascular plants. However, the path by which plants with these cells have evolved from their nonvascular ancestors is unclear. We investigated genes of the moss Physcomitrella patens that encode NAC proteins. Loss-of-function mutants formed abnormal water-conducting and supporting cells, as well as malformed sporophyte cells, and overexpression induced ectopic differentiation of water-conducting-like cells. Our results show conservation of transcriptional regulation and cellular function between moss and Arabidopsis thaliana water-conducting cells. The conserved genetic basis suggests roles for NAC proteins in the adaptation of plants to land.