During evolution, up to 10% of the mammalian genome may have arisen by rare retroposition events. This process involves reverse transcription of RNA intermediates that originate from retroviral and retroviral-like sequences, highly and middle repetitive DNA elements, and processed pseudogenes. The mechanism, and contemporary nature, for retrotransposition of the viral family and long interspersed elements has been well studied; however, it has proven difficult to demonstrate that the process by which pseudogenes retropose is continuing. In this report a mutation in the murine hypoxanthine-guanosine phosphoribosyl transferase (hprt) gene, which was previously isolated following retroviral infection of ES cells, is shown to result from a de novo retroposition of an alpha-tubulin pseudogene. Repair of this insertion by homologous recombination restores the activity of the hprt locus, thus confirming the site of mutation. This retroposon bears all the hallmarks of a naturally processed pseudogene [intron loss, presence of a poly(A) tail, and target site duplication] while the retroposition event took place at a known time in well-defined conditions, during retroviral infection of ES cells. The study of this mutation demonstrates that under appropriate conditions pseudogenes of protein-coding genes can still retropose in the mammalian genome. The coincidence of this mutagenic event with retroviral infection suggests that in this situation the reverse transcriptase may have had a retroviral origin, which would implicate a retroviral role in facilitating pseudogene formation.