The fungus Magnaporthe oryzae is a serious pathogen of rice and other grasses. Telomeric restriction fragments in Magnaporthe isolates that infect perennial ryegrass (prg) are hotspots for genomic rearrangement and undergo frequent, spontaneous alterations during fungal culture. The telomeres of rice-infecting isolates are very stable by comparison. Sequencing of chromosome ends from a number of prg-infecting isolates revealed two related non-LTR retrotransposons (M. oryzae Telomeric Retrotransposons or MoTeRs) inserted in the telomere repeats. This contrasts with rice pathogen telomeres that are uninterrupted by other sequences. Genetic evidence indicates that the MoTeR elements are responsible for the observed instability. MoTeRs represent a new family of telomere-targeted transposons whose members are found exclusively in fungi.