Our understanding of myelination has been greatly enhanced via the study of spontaneous mutants that harbor a defect in a gene encoding one of the major myelin proteins (myelin mutants). In this study, we describe a unique genetic defect in a new myelin mutant called the Long Evans shaker (les) rat that causes severe dysmyelination of the CNS. Myelin deficits result from disruption of the myelin basic protein (Mbp) gene caused by the insertion of an endogenous retrotransposon [early transposons (ETn) element] into a noncoding region (intron 3) of the gene. The ETn element alters the normal splicing dynamics of MBP mRNA, leading to a dramatic reduction in the levels of full-length isoforms (<5% of normal) and the appearance of improperly spliced, chimeric transcripts. Although these aberrant transcripts contain proximal coding regions of the MBP gene (exons 1-3), they are unable to encode functional proteins required to maintain the structural integrity of the myelin sheath. These chimeric transcripts seem capable, however, of producing the necessary signal to initiate and coordinate myelin gene expression because normal numbers of mature oligodendrocytes synthesizing abundant levels of other myelin proteins are present in the mutant CNS. The les rat is thus an excellent model to study alternative functions of MBP beyond its well characterized role in myelin compaction.