Mobile genetic elements are ubiquitous throughout the eukaryote superkingdom. We have sequenced a highly unusual full-length retroelement from the Fugu fish, Takifugu rubripes. This element, which we have named Xena, is similar in structure and sequence to the Penelope retroelement from Drosophila virilis and consists of a single long open reading frame containing a reverse transcriptase domain flanked by identical direct long terminal repeat (LTR) sequences. These LTRs show an organization similar to the terminal repeats already described in the Penelope retrotransposon of Drosophila but are structurally and functionally distinct from the LTRs carried by LTR-retrotransposons. In view of their distinctness, we refer to these repeats as PLTRs (Penelope-LTRs). Whereas the element contains a reverse transcriptase, no other domains or motifs commonly associated with retroelements are present. In the full-length Fugu element, the 5' direct PLTR is preceded by an inverted PLTR fragment. Additional elements, many showing various degrees of deletion, are described from the Fugu genome and from that of the freshwater pufferfish Tetraodon nigroviridis. Many of these additional elements are also preceded by inverted PLTR sequences. Xena-like elements are also described from the genomes of several other organisms. The Penelope-Xena lineage is apparently a basal group within the retrotransposons and therefore represents an evolutionarily important class of retroelement.