Ty3, a retrotransposon of Saccharomyces cerevisiae, is found within 20 base pairs (bp) of the 5' ends of different tRNA genes. Determination of the complete nucleotide sequence of one Ty3 retrotransposon (Ty3-2) shows that the element is composed of an internal domain 4,748 bp long flanked by long terminal repeats of the 340-bp sigma element. Three open reading frames (ORFs) longer than 100 codons are present in the sense strand. The first ORF, TYA3, encodes a protein with a motif found in the nucleic acid-binding protein of retroviruses. The second ORF, TYB3, has homology to retroviral pol genes. The deduced amino acid sequence of the reverse transcriptase domain shows the greatest similarity to Drosophila retrotransposon 17.6, with 43% identical residues. The inferred order of functional domains within TYB3--protease, reverse transcriptase, and endonuclease--resembles the order in Drosophila element 17.6 and in animal retroviruses but is different from that found in yeast elements Ty1 and Ty2. A second Ty3 element (Ty3-1) from a standard laboratory strain was overexpressed and shown to transpose.