Retroviruses are RNA viruses that are able to synthesize a DNA copy of their genome and insert it into a chromosome of the host cell. Sequencing of different eukaryote genomes has revealed the presence of many such endogenous retroviral sequences. The mechanisms by which these retroviral sequences have colonized the genome are still unknown, and the endogenous retrovirus gypsy of Drosophila melanogaster is a powerful experimental model for deciphering this process in vivo. Gypsy is expressed in a layer of somatic cells, and then transferred into the oocyte by an unknown mechanism. This critical step is the start of the endogenization process. Moreover gypsy has been shown to have infectious properties, probably due to its envelope gene acquired from a baculovirus. Recently we have also shown that gypsy maternal transmission is reduced in the presence of the endosymbiotic bacterium Wolbachia. These studies demonstrate that gypsy is a unique and powerful model for understanding the endogenization of retroviruses.