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

Mammalian genomes are scattered with transposable elements (TEs). TEs are epigenetically silenced to prevent harmful effects caused by either global activation leading to genome instability or insertional mutation disturbing gene transcription. However, whether the activation of a single element can contribute to pathological phenotypes without directly affecting gene expression is largely unknown. Here, we show that tissue-specific expression of a TE in the embryo leads to the production of viral-like particles (VLPs) which can affect organ formation. Failure to silence an LTR retrotransposon inserted upstream of the Fgf8 gene results in its co-expression with Fgf8 in the developing embryo. While local gene regulation is unaffected, the LTR retrotransposon participates in chromatin folding at the locus and adopts the expression of the regulatory domain it is located in. This drives the production of VLPs in the Fgf8 -expressing cells of the developing limb, triggering apoptotic cell death at the time of digit outgrowth and resulting in a limb malformation resembling human ectrodactyly. This phenotype can be rescued by knock-out or knock-in of the retrotransposon causing mutations preventing its full retroviral cycle. Insertion of the same element at other developmental loci faithfully recapitulates expression according to the neighboring regulatory activity. Our findings provide a mechanism by which TE insertion is incorporated into the local genomic regulatory landscape and show how VLP production in post-implantation embryos can interfere with organ formation.