The fish retrotransposable element Zebulon encodes a reverse transcriptase and a carboxy-terminal restriction enzyme-like endonuclease, and is related phylogenetically to site-specific non-LTR retrotransposons from nematodes. Zebulon was detected in the pufferfishes Tetraodon nigroviridis and Takifugu rubripes, as well as in the zebrafish Danio rerio. Structural analysis suggested that Zebulon, in contrast to most non-LTR retrotransposons, might be able to retrotranspose as a partial tandem array. Zebulon was active relatively recently in the compact genome of T. nigroviridis, in which it contributed to the extension of intergenic and intronic sequences, and possibly to the formation of genomic rearrangements. Accumulation of Zebulon together with other retrotransposons was observed in some heterochromatic chromosomal regions of the genome of T. nigroviridis that might serve as reservoirs for active elements. Hence, pufferfish compact genomes are not evolutionarily inert and contain active retrotransposons, suggesting the presence of mechanisms allowing accumulation of retrotransposable elements in heterochromatin, but minimizing their impact on euchromatic regions. Homologous recombination between partial tandem sequences eliminating active copies of Zebulon and reducing the size of insertions in intronic and intragenic regions might represent such a mechanism.