Two fungal pathogens, Cercospora zeae-maydis Groups I and II, cause gray leaf spot of maize. During the sequencing of a cosmid library from C. zeae-maydis Group I, we discovered a sequence with high similarity to Maggy, a transposable element from Magnaporthe grisea. The element from C. zeae-maydis, named Malazy, contained 194-base-pair terminal repeats and sequences with high similarity to reverse transcriptase and integrase, components of the POL gene in the gypsy-like retrotransposons in fungi. Sequences with similarity to other POL gene components, protease and ribonuclease, were not detected in Malazy. A single copy of the element was detected by PCR and Southern analyses in all six North American isolates of C. zeae-maydis Group I but was not detected in the four isolates of C. zeae-maydis Group II from three continents or in phylogenetically related species. Fragments of the core domains of reverse transcriptase and integrase contained a high frequency of stop codons that were conserved in all six isolates of Group I. Additional C:G to T:A transitions in occasional isolates usually were silent mutations, while two resulted in isolate-specific stop codons. The absence of Malazy from related species suggests that it was acquired after the divergence of C. zeae-maydis Groups I and II. The high frequency of stop codons and the presence of a single copy of the element suggest that it was inactivated soon after it was acquired. Because the element is inactive and because reading frames for other genes were not found in sequences flanking the element, Malazy does not appear to be the cause of differences leading to speciation or genetic diversity between C. zeae-maydis Groups I and II.