We present results demonstrating that the hobo family of transposable elements can promote high rates of chromosomal instability. Using strains with a hobo element inserted within the decapentaplegic gene complex (DPP-C), we have recovered numerous DPP-C mutations involving chromosomal rearrangements and deletions with one endpoint in the vicinity of the pre-existing hobo element. This hypermutability occurred in the germ lines of hybrid progeny from crosses involving strains containing hobo elements to strains lacking them. In some crosses, the offspring had rudimentary gonads, reminiscent of GD sterility. The germline hypermutability and infertility are similar to those produced by P-element-mediated hybrid dysgenesis. Given the many genetic and molecular similarities of the P and hobo systems, we propose that a system analogous to P-M hybrid dysgenesis has been activated in the hobo+ X hobo- crosses.