Previous studies of repetitive elements (REs) have implicated a mechanistic role in generating new chimerical genes. Such examples are consistent with the classic model for exon shuffling, which relies on non-homologous recombination. However, recent data for chromosomal aberrations in model organisms suggest that ectopic homology-dependent recombination may also be important. Lack of a dataset comprising experimentally verified young duplicates has hampered an effective examination of these models as well as an investigation of sequence features that mediate the rearrangements. Here we use ∼7,000 cDNA probes (∼112,000 primary images) to screen eight species within the Drosophila melanogaster subgroup and identify 17 duplicates that were generated through ectopic recombination within the last 12 mys. Most of these are functional and have evolved divergent expression patterns and novel chimeric structures. Examination of their flanking sequences revealed an excess of repetitive sequences, with the majority belonging to the transposable element DNAREP1 family, associated with the new genes. Our dataset strongly suggests an important role for REs in the generation of chimeric genes within these species.