Diversity-generating retroelements (DGRs), which are pervasive among microbes, create massive protein sequence variation through reverse transcription of a protein-coding RNA template coupled to frequent misincorporation at template adenines. For cDNA synthesis, the template must be surrounded by up- and downstream sequences. Cryo-EM revealed that this longer RNA formed an integral ribonucleoprotein (RNP) with the DGR reverse transcriptase bRT and associated protein Avd. The downstream, noncoding (nc) RNA formed stem-loops enveloping bRT and laying over barrel-shaped Avd, and duplexes with the upstream and template RNA. These RNA structural elements were required for reverse transcription, and several were conserved in DGRs from distant taxa. Multiple RNP conformations were visualized, and no large structural rearrangements occurred when adenine replaced guanine as the template base, suggesting energetics govern misincorporation at adenines. Our results explain how the downstream ncRNA primes cDNA synthesis, promotes processivity, terminates polymerization, and stringently limits mutagenesis to DGR variable proteins.