Full-length copies of a previously described repetitive DNA sequence (CH2-8) were isolated from the genome of the Magnaporthe grisea strain 2539. One copy of the complete element was sequenced and found to resemble a gypsy-like LTR retrotransposon. We named this element MAGGY (MAGnaporthe GYpsy-like element). MAGGY contains two internal ORFs putatively encoding Gag, Pol and Env-like proteins which are similar to peptides encoded by retroelements identified in other filamentous fungi. MAGGY was found to be widely distributed among M. grisea isolates from geographically dispersed locations and different hosts. It was present in high copy number in the genomes of all nine rice-pathogenic isolates examined. By contrast, M. grisea strains isolated from other Gramineae were found to possess varying copy numbers of MAGGY and in some cases the element was completely absent. The wide distribution of MAGGY suggests that this element invaded the genome of M. grisea prior to the evolution of rice-specific form(s). It may since have been horizontally transmitted to other sub-specific groups. One copy of MAGGY, corresponding to the element we sequenced, was located at identical locations in the genomes of geographically dispersed strains, suggesting that this copy of the element is a relatively ancient insertion.