Mobile genetic elements (e.g., transposable elements and plasmids) and viruses display significant diversity with various life cycles, but how this diversity emerges remains obscure. We previously reported a novel and giant (180 kb long) mobile element,Teratorn, originally identified in the genome of medaka,Oryzias latipes.Teratornis a composite DNA transposon created by a fusion of apiggyBac-like DNA transposon (piggyBac) and a novel herpesvirus of theAlloherpesviridaefamily. Genomic survey revealed thatTeratorn-like herpesviruses are widely distributed among teleost genomes, the majority of which are also fused withpiggyBac,suggesting that fusion withpiggyBacis a trigger for the life-cycle shift of authentic herpesviruses to an intragenomic parasite. Thus,Teratorn-like herpesvirus provides a clear example of how novel mobile elements emerge, that is to say, the creation of diversity. In this review, we discuss the unique sequence and life-cycle characteristics ofTeratorn, followed by the evolutionary process ofpiggyBac-herpesvirus fusion based on the distribution ofTeratorn-like herpesviruses (relatives) among teleosts. Finally, we provide other examples of evolutionary associations between different classes of elements and propose that recombination could be a driving force generating novel mobile elements.