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Approximately 1.5% of mouse genes (Mus musculus) contain long terminal repeat retrotransposon sequences (LRS). Consistent with earlier findings in Caenorhabditis elegans, Drosophila melanogaster, and Homo sapiens, LRS are more likely to be associated with newly evolved genes. Evidence is presented that LRS are often recruited as novel exons or as spliced additions to existing exons. These novel gene configurations may be expressed initially as alternative transcripts providing an opportunity for the evolution of new gene function.