Mobile group II introns encode reverse transcriptases and insert site specifically into intronless alleles (homing). Here, in vitro experiments show that homing of the yeast mtDNA group II intron aI2 occurs by reverse transcription at a double-strand break in the recipient DNA. A site-specific endonuclease cleaves the antisense strand of recipient DNA at position +10 of exon 3 and the sense strand at the intron insertion site. Reverse transcription of aI2-containing pre-mRNA is primed by the antisense strand cleaved in exon 3 and results in cotransfer of the intron and flanking exon sequences. Remarkably, the DNA endonuclease that initiates homing requires both the aI2 reverse transcriptase protein and aI2 RNA. Parallels in their reverse transcription mechanisms raise the possibility that mobile group II introns were ancestors of nuclear non-long terminal repeat retrotransposons and telomerases.