In a previous study, we found avian sarcoma and leukosis virus (ASLV) gag genes in 19 species of birds in the order Galliformes including all grouse and ptarmigan (Tetraoninae) surveyed. Our data suggested that retroviruses had been transmitted horizontally among some host species. To further investigate these elements, we sequenced a replication-defective retrovirus, here named tetraonine endogenous retrovirus (TERV), from Bonasa umbellus (ruffed grouse). This is the first report of a complete, replication-defective ASLV provirus sequence from any bird other than the domestic chicken. We found a replication-defective proviral sequence consisting of putative Gag and Env proteins flanked by long terminal repeats. Reverse transcription-PCR analysis showed that retroviral gag sequences closely related to TERV are transcribed, supporting the hypothesis that TERV is an active endogenous retrovirus. Phylogenetic analyses suggest that TERV may have arisen via recombination between different retroviral lineages infecting birds. Southern blotting using gag probes showed that TERV occurs in tetraonines but not in chickens or ducks, suggesting that integration occurred after the earliest phasianid divergences but prior to the radiation of tetraonine birds.