Endogenous retroviruses constitute a significant genomic fraction in all mammalian species. Typically they are evolutionarily old and fixed in the host species population. Here we report on a novel endogenous gammaretrovirus (CrERV␥; for cervid endogenous gammaretrovirus) in the mule deer (Odocoileus hemionus) that is insertionally polymorphic among individuals from the same geographical location, suggesting that it has a more recent evolutionary origin. Using PCR-based methods, we identified seven CrERV␥ proviruses and demonstrated that they show various levels of insertional polymorphism in mule deer individuals. One CrERV␥ provirus was detected in all mule deer sampled but was absent from white-tailed deer, indicating that this virus originally integrated after the split of the two species, which occurred approximately one million years ago. There are, on average, 100 CrERV␥ copies in the mule deer genome based on quantitative PCR analysis. A CrERV␥ provirus was sequenced and contained intact open reading frames (ORFs) for three virus genes. Transcripts were identified covering the entire provirus. CrERV␥ forms a distinct branch of the gammaretrovirus phylogeny, with the closest relatives of CrERV␥ being endogenous gammaretroviruses from sheep and pig. We demonstrated that white-tailed deer (Odocoileus virginianus) and elk (Cervus canadensis) DNA contain proviruses that are closely related to mule deer CrERV␥ in a conserved region of pol; more distantly related sequences can be identified in the genome of another member of the Cervidae, the muntjac (Muntiacus muntjak). The discovery of a novel transcriptionally active and insertionally polymorphic retrovirus in mammals could provide a useful model system to study the dynamic interaction between the host genome and an invading retrovirus.