Fragile X-associated tremor/ataxia syndrome (FXTAS) is a neurodegenerative disorder associated with fragile X premutation carriers. Previous studies have shown that fragile X rCGG repeats are sufficient to cause neurodegeneration and that the rCGG-repeat-binding proteins Pur α and heterogeneous nuclear ribonucleoprotein (hnRNP) A2/B1 could modulate rCGG-mediated neuronal toxicity. Mobile genetic elements or their remnants populate the genomes, and the activities of these elements are tightly controlled for the fitness of host genomes in different organisms. Here we provide both biochemical and genetic evidence to show that the activation of a specific retrotransposon, gypsy, can modulate rCGG-mediated neurodegeneration in an FXTAS Drosophila model. We find that one of the rCGG-repeat-binding proteins, hnRNP A2/B1, is involved in this process via interaction with heterochromatin protein 1. Knockdown of gypsy RNA by RNAi could suppress the neuronal toxicity caused by rCGG repeats. These data together point to a surprisingly active role for retrotransposition in neurodegeneration.