Retroelements are genetic elements that use reverse transcriptase to insert DNA copies of their RNA into new locations in the host genome. They are found in all realms of life and are one of the major agents shaping genomes. A newly discovered class of viral and bacterial retroelements, the diversity-generating retroelements (DGRs), have the unusual ability to repeatedly target and mutagenize a defined region of the host genome. This process is conceptually similar to the antibody diversification process of the immune system, but has developed independently and thus employs an entirely different mechanism. The proposed project seeks to elucidate several aspects of DGR function in order to deepen our understanding of this novel mutagenic mechanism and evaluate its implications and applications in such diverse fields as biotechnology, medicine, evolution and immunology. The first major aim will be the development of a fluorescence-based in vivo assay system for DGR activity. This will speed up the experimental read-out drastically and allow for systematic screening to identify crucial components of the mutagenic mechanism. In parallel, the molecular components of DGR elements will be characterised in the second research aim. The reverse transcriptase protein and the RNA template will be investigated using biochemical, biophysical and structural methods. Many components of this proposal draw heavily on my postdoctoral experience, while other parts require co-operation with groups at the host university and European research institutes. Moreover, through teaching at university level, I will be able to train young researchers and expose them to cutting-edge research. Taken together, the proposed project thus leads to knowledge transfer into the European Union, long-term re-integration of a European researcher, and introduction of an exciting new research field that is currently underrepresented in Europe.