The genomic RNA of the gypsy retroelement from Drosophila melanogaster exhibits features similar to other retroviral RNAs because its 5' untranslated (5' UTR) region is unusually long (846 nucleotides) and potentially highly structured. Our initial aim was to search for an internal ribosome entry site (IRES) element in the 5' UTR of the gypsy genomic RNA by using various monocistronic and bicistronic RNAs in the rabbit reticulocyte lysate (RRL) system and in cultured cells. Results reported here show that two functionally distinct and independent RNA domains control the production of gypsy encoded proteins. The first domain corresponds to the 5' UTR of the env subgenomic RNA and exhibits features of an efficient IRES (IRESE) both in the reticulocyte lysate and in cells. The second RNA domain that encompasses the gypsy insulator can function as an IRES in the rabbit reticulocyte lysate but strongly represses translation in cultured cells. Taken together, these results suggest that expression of the gypsy encoded proteins from the genomic and subgenomic RNAs can be regulated at the level of translation.