Bombyx mori was domesticated from Bombyx mandarina. The long-term domestication of the silkworm has brought about many remarkable changes to its body size and cocoon shell weight. However, the molecular mechanism underlying the improvement in the economic characteristics of this species during domestication remains unclear. In this study, we found that a transposable element (TE)—Bm1—was present in the upstream regulatory region of the Mlx (Max-like protein X) gene in wild silkworms but not in all domesticated silkworms. The absence of Bm1 caused an increase in the promoter activity and mRNA content of Mlx. Mlx and its partner Mondo belong to the bHLHZ transcription factors family and regulate nutrient metabolism. RNAi of Mlx and Mondo decreased the expression and promoter activity of glucose metabolism-related genes (trehalose transport (Tret), phosphofructokinase (PFK), and pyruvate kinase (PK)), lipogenic genes (Acetyl-CoA carboxylase (ACC) and fatty acid synthase (FAS)), and glutamine synthesis gene (Glutamine synthase 2, (GS2)). Furthermore, the transgenic overexpression of Mlx and Mondo in the fat body of silkworms increased the larval body size, cocoon shell weight, and egg number, but the silencing of the two genes resulted in the opposite phenotypes. Our results reveal the molecular mechanism of Mlx selection during domestication and its successful use in the molecular breeding of Bombyx mori.