Co-option of transposable elements (TEs) to become part of existing or new enhancers is an important mechanism for evolution of gene regulation. However, contributions of lineage-specific TE insertions to recent regulatory adaptations remain poorly understood. Gibbons present a suitable model to study these contributions as they have evolved a lineage-specific TE called LAVA, which is still active in the gibbon genome. The LAVA retrotransposon is thought to have played a role in the emergence of the highly rearranged structure of the gibbon genome by disrupting transcription of cell cycle genes. In this study, we investigated whether LAVA may have also contributed to the evolution of gene regulation by adopting enhancer function. We characterized fixed and polymorphic LAVA insertions across multiple gibbons and found 96 LAVA elements overlapping enhancer chromatin states. Moreover, LAVA was enriched in multiple transcription factor binding motifs, was bound by an important transcription factor (PU.1), and was associated with higher levels of gene expression in cis. We found gibbon-specific signatures of purifying/positive selection at 27 LAVA insertions. Two of these insertions were fixed in the gibbon lineage and overlapped with enhancer chromatin states, representing putative co-opted LAVA enhancers. These putative enhancers were located within genes encoding SETD2 and RAD9A, two proteins that facilitate accurate repair of DNA double-strand breaks and prevent chromosomal rearrangement mutations. Co-option of LAVA in these genes may have influenced regulation of processes that preserve genome integrity. Our findings highlight the importance of considering lineage-specific TEs in studying evolution of novel gene regulatory elements.