We characterized an unusual tRNA-like sequence that had been found inserted in suppressive variants of the mitochondrial retroplasmid of Neurospora intermedia strain Varkud. We previously identified two forms of the tRNA-like sequence, one of 64 nt (TRL-64) and the other of 78 nt (TRL-78) containing a 14-nt internal insertion in the anticodon stem at a position expected for a nuclear tRNA intron. Here, we show that TRL-78 is encoded in Varkud mitochondrial (mt)DNA within a 7 kb sequence that is not present in Neurospora crassa wild-type 74A mtDNA. This 7-kb insertion also contains a perfectly duplicated tRNA Trp gene, segments of several mitochondrial plasmids and numerous GC-rich palindromic sequences that are repeated elsewhere in the mtDNA. The mtDNA-encoded copy of TRL-78 is transcribed and apparently undergoes 5′-and 3′-end processing and 3′ nucleotide addition by tRNA nucleotidyl transferase to yield a discrete tRNA-sized molecule. However, the 14 nt intron-like sequence in TRL-78, which is missing in the TRL-64 form, is not spliced detectably in vivo or in vitro. Our results show that TRL-78 is an unusual tRNA-like species that could be incorporated into suppressive retroplasmids by the same reverse transcription mechanism used to incorporate mt tRNAs. The tRNA-like sequence may have been derived from an intron-containing nuclear tRNA gene or it may serve some function, like tmRNA. Our results suggest that mt tRNAs or tRNA-like species may be integrated into mtDNA via reverse transcription, analogous to SINE elements in animal cells.