I-R hybrid dysgenesis in Drosophila melanogaster occurs in female progeny of crosses between reactive strain females and inducer strain males, and is controlled by transposable elements called I-factors. These are 5.4 kb elements that are structurally similar to mammalian LINE elements and other retroposons. We have tested the activity of an I-factor directly, by introducing it into the genome of a reactive strain, using P-element mediated transformation. It confers the complete inducer phenotype on the reactive strain, and can stimulate dysgenesis when transformed males are mated with reactive females. It has transposed in the transformed lines, and we have cloned one of the transposed copies. This is the first time that it has been possible to demonstrate that a particular retroposon is transposition proficient, and to compare donor and transposed elements. We propose a mechanism for I-factor transposition based on these results, and the coding capacity of these elements. We have been unable to detect either autonomous transposition of a complete I-factor from a plasmid injected into reactive strain embryos, or transposition of a marked I-factor when co-injected with a complete element.