The retinal degeneration 7 (rd7) mouse is a naturally occurring model of enhanced S-cone syndrome, Goldman-Favre syndrome and clumped pigmentary retinopathy in humans, allelic disorders caused by inactivation of a photoreceptor-specific nuclear hormone receptor, NR2E3. We show here that the rd7 mutation arose from the antisense insertion of a long interspersed nuclear element (LINE-1) (or L1) into exon 5 of the mouse Nr2e3 gene. L1 insertion blocks splicing of Nr2e3 intron 5 by separating an inefficient splice donor from essential splicing enhancers within exon 5, with the result that incompletely spliced transcripts accumulate to high levels at the mutant Nr2e3 locus in photoreceptor nuclei. The high efficiency of transcription through the 7 kb L1 was unexpected and led us to compare the effect on transcript abundance of sense or antisense L1 insertions in transfected cells. In a variety of sequence contexts antisense L1 insertions had little or no effect on transcript levels or the production of full-length transcripts, whereas sense L1 insertions reduced transcript levels from several-fold to more than 10-fold. A bioinformatic analysis of all mouse L1s shows a approximately 2-fold under-representation of L1s in introns when compared with bulk genomic DNA, and, within introns, a further approximately 2-fold under-representation of sense when compared with antisense L1s. Interestingly, there is no evidence for orientation-specific positive or negative selection within any subregions of the L1 element. These data suggest that L1s have evolved to present the host transcriptional machinery with a minimally disruptive profile in the antisense orientation such that antisense intronic L1s often escape purifying negative selection.