Retrotransposons are ubiquitous components of eukaryotic genomes suggesting that they have played a significant role in genome organization. In Saccharomyces cerevisiae, eight of 10 endogenous insertions of the Ty5 retrotransposon family are located within 15 kb of chromosome ends, and two are located near the subtelomeric HMR locus. This genomic organization is the consequence of targeted transposition, as 14 of 15 newly transposed Ty5 elements map to telomeric regions on 10 different chromosomes. Nine of these insertions are within 0.8 kb and three are within 1.5 kb of the autonomously replicating consensus sequence in the subtelomeric X repeat. This suggests that the X repeat plays an important role in directing Ty5 integration. Analysis of endogenous insertions from S.cerevisiae and its close relative S.paradoxus revealed that only one of 12 insertions has target site duplications, indicating that recombination occurs between elements. This is further supported by the observation that Ty5 insertions mark boundaries of sequence duplications and rearrangements in these species. These data suggest that transposable elements like Ty5 can shape the organization of chromosome ends through both transposition and recombination.