The gypsy element of Drosophila melanogaster is the first retrovirus identified in invertebrates. Its transposition is controlled by a host gene called flamenco (flam): restrictive alleles of this gene maintain the retrovirus in a repressed state while permissive alleles allow high levels of transposition. To develop a cell system to study the gypsy element, we established four independent cell lines derived from the Drosophila strain SS, which contains a permissive allele of flamenco, and which is devoid of transposing copies of gypsy. The ultrastructural analysis of three SS cell lines revealed some remarkable characteristics, such as many nuclear virus-like particles, cytoplasmic dense particles, and massive cisternae filled with a fibrous material of unknown origin. Gypsy intragenomic distribution has been compared between the three cell lines and the original SS fly strain, and revealed in two of the cell lines an increase in copy number of a restriction fragment usually present in active gypsy elements. This multiplication seems to have occurred during the passage to the cell culture. Availability of SS cell lines should assist studies of gypsy transposition and infectivity and might be useful to produce high amounts of gypsy viral particles. These new lines already allowed us to show that the Envelope-like products of gypsy can be expressed as membrane proteins.