The structural organization of the retrotransposon gypsy (mdg4) is investigated in two Drosophila melanogaster strains. One of them, the stable w strain (SS), is characterized by a small copy number and stable localization of gypsy. In the other, unstable mutator strain (MS) which is derived from SS, the gypsy copy number and the frequency of its transposition are greatly increased. Genomic gypsy copies cloned from both strains display structural differences allowing them to be divided into two subfamilies. At the nucleotide level, these differences involve single substitutions, deletions and insertions. Southern blot analysis revealed that SS possesses only gypsy elements that belong to one subfamily, while in MS only gypsy copies from the other subfamily were amplified and transposed. The transcriptional activity of gypsy was also studied. Despite the structural differences, plasmid-borne copies of each type of gypsy exhibit equal transcriptional activity in transfected tissue culture cells. Nevertheless, although a high level of gypsy transcription is observed in MS, gypsy poly(A)+RNA is not detected in SS.