We have found reverse transcriptase activity and virus-like particles only in yeast cells that contain a galactose-promoted Ty element induced on galactose. The cofractionation of reverse transcriptase, genomic-length Ty RNA, and a Ty-specified protein antigen in a particulate fraction and the ability of this complex to synthesize specifically a product that is homologous to the entire Ty suggest that reverse transcription of Ty RNA takes place in the particle. The absence of appreciable levels of reverse transcriptase and particles in uninduced cells despite the presence of at least 35 copies of chromosomal Ty elements suggest that some of these elements may be defective. The numerous virus-like particles visible in thin sections of Ty transposition-induced cells appear not to be infectious. These particles resemble the intracisternal A-type particles of the mouse and copia particles of Drosophila. The results support the idea that Ty elements and retroviruses share a common origin.