Telomeres of Drosophila appear to be very different from those of other organisms. A transposable element, HeT-A, plays a major role in forming telomeres and may be the sole structural element, since telomerase-generated repeats are not found. HeT-A transposes only to chromosome ends. It appears to be a retrotransposon but has novel structural features, which may be related to its telomere functions. A consensus sequence from cloned HeT-A elements defines an element of similar to 6 kb. The coding region has retrotransposon-like overlapping open reading frames (ORFs) with a -1 frameshift in a sequence resembling the frameshift region of the mammalian HIV-1 retrovirus. Both the HeT-A ORFs contain motifs suggesting RNA binding. HeT-A-specifre features include a long non-coding region, 3' of the ORFs, which makes up about half of the element. This region has a regular array of imperfect sequence repeats and ends with oligo(A), marking the end of the element and suggesting a polyadenylated RNA transposition intermediate. This 3' repeat region may have a structural role in heterochromatin. The most distal part of each complete HeT-A on the chromosome, the region 5' of the ORFs, has unusual conserved features, which might produce a terminal structure for the chromosome.