New gene functions arise within existing gene families as a result of gene duplication and subsequent diversification. However, the evolutionary forces that act on gene duplicates (paralogs) over time, as well as the intermediate steps on the path to functional change, are not well understood. In an effort to understand functional diversification in paralogs on both the genomic and subcellular level, we tracked duplicate retention patterns and subcellular markers of functional diversification in the Rab GTPase gene family in Paramecium aurelia species. Rab GTPases are on the whole more highly expressed and more highly retained than other genes in Paramecium genomes after whole genome duplication (WGD). Additionally, consistent with early steps in functional diversification, expression levels of these recent Rab paralogs appear to be diverging more rapidly from one another than other genes in the genome. We uncovered evidence of diversification at the subcellular level by localizing GFP-tagged paralogs from the Rab11 subfamily. Because the functionally diversifying paralogs are closely related to and derived from a clade of functionally conserved paralogs, we were able to pinpoint two specific amino acid residues that may be the drivers of the change in localization and, thus, function. Interestingly, the functionally conserved proteins label compartments involved in both endocytic recycling, the conserved Rab11 function, and phagocytic recycling, revealing evolutionary links between the two pathways.