HeT-A elements are non-long terminal repeat (non-LTR) retrotransposons found in head-to-tail arrays on Drosophila chromosome ends, where they form telomeres. We report that HeT-A promoter activity is located in the 3' end of the element, unlike the 5' location seen for other non-LTR retrotransposons. In HeT-A arrays the 3' sequence of one element directs transcription of its downstream neighbor. Because the upstream promoter has the same sequence as the 3' end of the transcribed element, the HeT-A promoter is effectively equivalent to a 5' LTR in both structure and function. Retroviruses and LTR retrotransposons have their promoters and transcription initiation sites in their 5' LTRs. Thus HeT-A appears to have the structure of an evolutionary intermediate between non-LTR and LTR retrotransposons.