It is very likely that formation of new genes is the main pathway of molecular evolution in living organisms. Many such genes are products of preexisting reshuffling of genetic material. In these processes a very important role is played by mutations associated with the activity of transposable elements, mostly retroelements (REs) for higher eukaryotes. The life cycle of REs involves a stage of so-called reverse transcription of their RNA intermediates, i.e. synthesis of complementary DNA on an RNA template. Transcriptionally active sequences of RE origin are referred to as retrogenes. REs create chimeric genes by a variety of mechanisms: new RE insertions, recombinations between RE sequences, formation of functional gene active pseudogenes and template switches during reverse transcription of messenger RNA. The abovementioned events are also able to give rise to new RE families. These mechanisms are reviewed here along with the description of major RE groups.