BACKGROUND Current evidence suggests that lepidopteran baculoviruses may be divided into two phylogenetic groups based on their envelope fusion proteins. One group utilizes gp64, a low pH-dependent envelope fusion protein, whereas the other employs a protein family (e.g. LD130 in the Lymantria dispar nucleopolyhedrovirus) unrelated to gp64, but that is also low pH-dependent. Database searches with members of the LD130 protein family often record significant levels of homology to envelope proteins from a number of insect retrovirus-like transposable elements of the gypsy class. In this report, the significance of the homology between these two types of envelope proteins is analyzed. RESULTS The significance of the alignment scores was evaluated using Z-scores that were calculated by comparing the observed alignment score to the distribution of scores obtained for alignments after one of the sequences was subjected to 100 random shuffles of its sequence. These analyses resulted in Z-scores of >9 for members of the LD130 family when compared to most gypsy envelope proteins. Furthermore, in addition to significant levels of sequence homology and the presence of predicted signal sequences and transmembrane domains, members of this family contain a possible a furin cleavage motif, a conserved motif downstream of this site, predicted coiled-coil domains, and a pattern of conserved cysteine residues. CONCLUSIONS These analyses provide a link between envelope proteins from a group of insect retrovirus-like elements and a baculovirus protein family that includes low-pH-dependent envelope fusion proteins. The ability of gypsy retroelements to transpose from insect into baculovirus genomes suggests a pathway for the exchange of this protein between these viral families.