A diminutive rye chromosome (midget) in wheat was used as a model system to isolate a highly reiterated centromeric sequence from a rye chromosome. Fluorescence in situ hybridization (FISH) shows this sequence localized within all rye centromeres and no signal was detected on wheat chromosomes. DNA sequencing of the repetitive element has revealed the presence of some catalytic domains and signature motifs typical of retrotransposon genes and has been called the Bilby family, representing a diverged family of retrotransposon-like elements. Extensive DNA database searching revealed some sequence similarity to centromeric retrotransposons from wheat, barley, and centromeric repetitive sequences from rice. Very low levels of signal were observed when Bilby was used as a probe against barley, and no signal was detected with rice DNA during Southern hybridization. The abundance of Bilby in rye indicates that this family may have diverged from other distantly related centromeric retrotransposons or incorporated in the centromere but rapidly evolved in rye during speciation. The isolation of a rye retrotransposon also allowed the analysis of centromeric breakpoints in wheat-rye translocation lines. A quantitative analysis shows that the breakpoint in IDS.1RL and 1DL.1RS and recombinant lines containing proximal rye chromatin have a portion of the rye centromere that may contribute to the normal function of the centromeric region.