The elucidation of complete genomic sequences from a wide variety of retroviruses and retrotransposons has allowed the construction of sequence-based phylogenies that reveal their evolutionary history. True retroviruses, whether exogenous or endogenous, tend to cluster into four major groups. Not only is there no distinction between exogenous and endogenous viruses, but their evolutionary limb lengths on the phylogenetic trees are comparable. This can be taken as evidence favoring a dynamic equilibrium balancing a constant invasion of germlines by infectious retroviruses on the one hand, with subsequent escape of endogenous viruses to alternative hosts on the other. Retroviruses share a common ancestry with a wide variety of retrotransposons and other reverse transcriptase-bearing entities. One of these retrotransposon groups, the Gypsy group, resembles the Moloney mouse group of retroviruses much more closely than it does other retroviruses. The simplest explanation is that the evolutionary rate of the retrotransposon is much slower than the retrovirus rate and that among the retroviruses the Moloney mouse group has been evolving more slowly than the other three groups, leaving the two short-limbed taxa more similar. The alternative explanation that these two groups actually shared a common ancestor more recently than has either with the other retrovirus groups is not supported by residue-by-residue character assessment.