Drosophila gurken mRNA is localized by dynein-mediated transport to a crescent near the oocyte nucleus, thus targeting the TGFalpha signal and forming the primary embryonic axes. Here, we show that gurken and the I factor, a non-LTR retrotransposon, share a small consensus RNA stem loop of defined secondary structure, which forms a conserved signal for dynein-mediated RNA transport to the oocyte nucleus. Furthermore, gurken and the I factor compete in vivo for the same localization machinery. I factor transposition leads to its mRNA accumulating near and within the oocyte nucleus, thus causing perturbations in gurken and bicoid mRNA localization and axis specification. These observations further our understanding of the close association of transposable elements with their host and provide an explanation for how I factor transposition causes female sterility. We propose that the transposition of other elements may exploit the host's RNA transport signals and machinery.