A comprehensive phylogenetic analysis was conducted of non-long-terminal-repeat (non-LTR) retrotransposons based on an extended sequence alignment of their reverse transcriptase (RT) domain. The 440 amino acid positions used included a region proposed to be similar to the "thumb" of the right-handed RT structure found in retroviruses. All identified non-LTR elements could be grouped into 11 distinct clades. Using the rates of sequence change derived from studies of the vertical inheritance of R1 and R2 elements in arthropods as a comparison, we found no evidence for the horizontal transmission of non-LTR elements. Assuming vertical descent, the phylogeny suggested that non-LTR elements are as old as eukaryotes, with each of the 11 clades dating back to the Precambrian era. The analysis enabled us to propose a simple chronology for the acquisition of different enzymatic domains in the evolution of the non-LTR class of retrotransposons. The first non-LTR elements were sequence specific by virtue of a restriction-enzyme-like endonuclease located downstream of the RT domain. Evolving from this original group were elements (eight clades) that acquired an apurinic-apyrimidic endonuclease-like domain upstream of the RT domain. Finally, four of these clades have inherited an RNase H domain downstream of the RT domain. The phylogenies of the AP endonuclease and RNase H domains were also determined for this report and are consistent with the monophyletic acquisition of these domains. These studies represent the most comprehensive effort to date to trace the evolution of a major class of transposable elements.