Using as a reporter gene a non-coding proviral structure marked with an intron-containing indicator, we demonstrate the de novo formation, via a retrotransposition pathway, of canonical processed pseudogenes in cultured mammalian cells. Their structural features include endings corresponding to the start and termination of the RNA intermediate, intron loss, acquisition of a 3' poly(A) tail, and target site duplications of variable length. The absence of extracellular intermediates for these processes, and the elimination during retrotransposition of sequences in the reporter gene essential in cis for a retroviral cycle, further suggest that endogenous retroviruses or related elements are not involved. Pseudogene formation frequency is markedly increased (up to 10-fold) by several treatments including treatment with 5-azacytidine or tetradecanoyl phorbol acetate, or serum starvation, which do not act at the reporter gene transcription level, but rather on endogenous genes--including the LINE elements--necessarily involved in trans-complementation for retrotransposition.