The replication of Long Terminal Repeat (LTR) retrotransposons, which can constitute over 80% of higher plant genomes, resembles that of retroviruses. A major question for retrotransposons and retroviruses is how the two conflicting roles of their transcripts, in translation and reverse transcription, are balanced. Here, we show that the BARE retrotransposon, despite its organization into just one open reading frame, produces three distinct classes of transcripts. One is capped, polyadenylated, and translated, but cannot be copied into cDNA. The second is not capped or polyadenylated, but is destined for packaging and ultimate reverse transcription. The third class is capped, polyadenylated, and spliced to favor production of a subgenomic RNA encoding only Gag, the protein forming virus-like particles. Moreover, the BARE2 subfamily, which cannot synthesize Gag and is parasitic on BARE1, does not produce the spliced sub-genomic RNA for translation but does make the replication competent transcripts, which are packaged into BARE1 particles. To our knowledge, this is first demonstration of distinct RNA pools for translation and transcription for any retrotransposon.