The sheep genome harbors ≈20 copies of endogenous retroviruses (enJSRVs) closely related to the exogenous and oncogenic Jaagsiekte sheep retrovirus (JSRV). One of the enJSRV loci, enJS56A1, has a defect for viral exit. We report a previously uncharacterized mechanism of retroviral interference. The defect possessed by enJS56A1 is determined by its Gag protein and is transdominant over the exogenous JSRV. By electron microscopy, cells transfected by enJS56A1, with or without JSRV, show...