BACKGROUND: Rotifers of the class Bdelloidea are microscopic freshwater invertebrates best known for: their capacity for anhydrobiosis; the lack of males and meiosis; and for the ability to capture genes from other non-metazoan species. Although genetic exchange between these animals might take place by non-canonical means, the overall lack of meiosis and syngamy should greatly impair the ability of transposable elements (TEs) to spread in bdelloid populations. Previous studies demonstrated that bdelloid chromosome ends, in contrast to gene-rich regions, harbour various kinds of TEs, including specialized telomere-associated retroelements, as well as DNA TEs and retrovirus-like retrotransposons which are prone to horizontal transmission. Vertically-transmitted retrotransposons have not previously been reported in bdelloids and their identification and studies of the patterns of their distribution and evolution could help in the understanding of the high degree of TE compartmentalization within bdelloid genomes. RESULTS: We identified and characterized a non-long terminal repeat (LTR) retrotransposon residing primarily in subtelomeric regions of the genome in the bdelloid rotifer Adineta vaga. Contrary to the currently prevailing views on the mode of proliferation of non-LTR retrotransposons, which results in frequent formation of 5'-truncated ('dead-on-arrival') copies due to the premature disengagement of the element-encoded reverse transcriptase from its template, this non-LTR element, Hebe, is represented only by non-5'-truncated copies. Most of these copies, however, were subject to internal deletions associated with microhomologies, a hallmark of non-homologous end-joining events. CONCLUSIONS: The non-LTR retrotransposon Hebe from the bdelloid rotifer A. vaga was found to undergo frequent microhomology-associated deletions, rather than 5'-terminal truncations characteristic of this class of retrotransposons, and to exhibit preference for telomeric localization. These findings represent the first example of a vertically transmitted putatively deleterious TE in bdelloids, and may indicate the involvement of microhomology-mediated non-homologous end-joining in desiccation-induced double-strand break repair at the genome periphery.