Retinal degeneration in the rd mouse is inherited as an autosomal recessive trait and is caused by a defect in the gene encoding the beta subunit of cGMP phosphodiesterase. Recently, a close genetic association of the rd gene with an endogenous xenotropic murine leukemia virus (Xmv-28) was established by linkage analysis using recombinant inbred strains of mice. In this study, genomic DNA mapping and sequence analyses clarify the position of the proviral sequences in relation to the rd gene. We find that the Xmv-28 provirus is integrated into intron I of the rd gene 1511 bp downstream of the exon-intron boundary. The transcriptional orientation of the provirus is opposite to that of the gene for the beta subunit of cGMP phosphodiesterase. Reverse transcription-PCR demonstrates that the integrated Xmv-28 sequences are transcribed in the retina. The provirus is present in every strain of rd mouse tested.