The retrotransposon Ty4 is found in different yeast strains at only one to three copies per haploid genome. In the present study, we aimed at relating the apparent low transpositional activity of Ty4 to transcriptional features of this element. RT-PCR revealed that Ty4 is transcribed at a very low level, being comparable with that of GAL4. Contrary to other Ty elements, the transcriptional rate of Ty4 is not affected in a sin4 background nor by treatment of cells with alpha factor. From experiments measuring the expression levels in 1acZ fusion constructs, we conclude that Ty4 transcription is repressed by a negative regulating element residing within the LTR, whereas positive cis-acting elements, like those that have been found to mediate expression of Ty1/2 and Ty3, are absent from Ty4. Analysing Ty4 transcript termini by the RACE-PCR method, we found several distinct transcriptional initiation sites. But surprisingly, the majority of the polyadenylated Ty4 transcripts terminate shortly upstream from the 3' LTR boundary, so that these transcripts do not contain a U3-R sequence, which is normally required for obligate strand transfer during DNA synthesis. Thus, the extremely low transcription rate of Ty4 and imperfect Ty4 transcripts are the reason for the low transpositional activity of this element.