Many eukaryotic taxa inherit a heteromorphic sex chromosome pair. It is a generally accepted hypothesis that the sex chromosome pair is derived from a pair of homologous autosomes that has developed after the occurrence of a sex differentiator in an evolutionary process into two structurally and functionally different partners. In most of the analyzed systems the occurrence of the dominant sex differentiator is paralleled by the suppression of recombination within and close by that region. The recombinational isolation can spread in an evolutionary selection process from neighboring regions finally over the whole chromosome. Suppression of recombination strongly biases the distribution of retrotransposons in the genome. Our results and that from others indicate that the major force driving the evolution of Y chromosomes are retrotransposons, remodeling euchromatic chromosome structures into heterochromatic ones. In our model, intact or already eroded retrotransposons become trapped due to their inherent transposition mechanisms in non-recombining regions. The massive accumulation of retrotransposons interferes strongly with the activity of genes. We hypothesize that Y chromosome degeneration is a stepwise evolutionary process: (1) Massive accumulation of retrotransposons occurs in the non-recombining regions. (2) Heterochromatic nucleation centers are formed as a consequence of genomic defense against invasive parasitic elements; the established nucleation centers become epigenetically inherited. (3) Spreading of heterochromatin from the nucleation centers into flanking regions induces in an adaptive process gene silencing of neighbored genes that could either be still intact or in an already eroded condition, e.g., showing point mutations, deletions, insertions; the retroelements should be subjects to the same forces of deterioration as the genes themselves. (4) Constitutive silenced genes are not committed to the same genetic selection pressure as active genes and therefore more exposed to the decay process. (5) Gene dosage balance is reestablished by the parallel evolution of dosage compensation mechanisms. The evolving secondary sex chromosomes, neo-X and neo-Y, of Drosophila miranda are revealed to be a unique and potent model system to catch the evolutionary Y deterioration process in progress.