Long interspersed elements (LINEs) are endogenous mobile genetic elements that have dispersed and accumulated in the genomes of higher eukaryotes via germline transposition, with up to 100,000 copies in mammalian genomes. In humans, LINEs are the major source of insertional mutagenesis, being involved in both germinal and somatic mutant phenotypes. Here we show that the human LINE retrotransposons, which transpose through the reverse transcription of their own transcript, can also mobilize transcribed DNA not associated with a LINE sequence by a process involving the diversion of the LINE enzymatic machinery by the corresponding mRNA transcripts. This results in the 'retroposition' of the transcribed gene and the formation of new copies that disclose features characteristic of the widespread and naturally occurring processed pseudogenes: loss of intron and promoter, acquisition of a poly(A) 3' end and presence of target-site duplications of varying length. We further show-by introducing deletions within either coding sequence of the human LINE-that both ORFs are necessary for the formation of the processed pseudogenes, and that retroviral-like elements are not able to produce similar structures in the same assay. Our results strengthen the unique versatility of LINEs as genome modellers.