Enhancer adoption by an LTR retrotransposon generates viral-like particles causing developmental limb phenotypes

Mammalian genomes are scattered with transposable elements (TEs). Silencing of TEs prevents harmful effects caused by either global activation leading to genome instability or insertional mutation disturbing gene transcription. However, whether the activation of a TE can be pathological without directly affecting gene expression is largely unknown. Here, we show that a TE insertion can adopt nearby regulatory activity, producing cell-type-specific viral-like particles (VLPs) in the embryo and affecting organ formation. Failure to silence an LTR retrotransposon inserted upstream of the Fgf8 gene results in their co-expression during development. VLPs assembly in the Fgf8-expressing cells of the developing limb triggers apoptotic cell death, resulting in a limb malformation resembling human ectrodactyly. We rescued this phenotype with mutations in the retrotransposon coding sequence, preventing its full endogenous retroviral cycle. Our findings illustrate how TE insertion is incorporated into the local genomic regulatory landscape and show that VLP production in post-implantation embryos can be pathological.