The nonrandom integration of retrotransposons and retroviruses suggests that chromatin influences target choice. Targeted integration, in turn, likely affects genome organization. In Saccharomyces, native Ty5 retrotransposons are located near telomeres and the silent mating locus HMR. To determine whether this distribution is a consequence of targeted integration, we isolated a transposition-competent Ty5 element from S. paradoxus, a species closely related to S. cerevisiae. This Ty5 element was used to develop a transposition assay in S. cerevisiae to investigate target preference of de novo transposition events. Of 87 independent Ty5 insertions, approximately 30% were located on chromosome III, indicating this small chromosome (approximately 1/40 of the yeast genome) is a highly preferred target. Mapping of the exact location of 19 chromosome III insertions showed that 18 were within or adjacent to transcriptional silencers flanking HML and HMR or the type X subtelomeric repeat. We predict Ty5 target preference is attributable to interactions between transposition intermediates and constituents of silent chromatin assembled at these sites. Ty5 target preference extends the link between telomere structure and reverse transcription as carried out by telomerase and Drosophila retrotransposons.