Endogenous retroviruses (ERVs) comprise 8% of the human genome and are common in all vertebrate genomes. The only retrovirus known to be currently transitioning from exogenous to endogenous form is the koala retrovirus (KoRV), making koalas (Phascolarctos cinereus) ideal for examining the early stages of retroviral endogenization. To distinguish endogenous from exogenous KoRV proviruses, we isolated koala genomic regions flanking KoRV integration sites. In three wild southern Australian koalas, there were fewer KoRV loci than in three captive Queensland koalas, consistent with reports that southern Australian koalas carry fewer KoRVs. Of 39 distinct KoRV proviral loci examined in a sire–dam–progeny triad, all proved to be vertically transmitted and endogenous; none was exogenous. Of the 39 endogenous KoRVs (enKoRVs), only one was present in the genomes of both the sire and the dam, suggesting that, at this early stage in the retroviral invasion of a host germ line, very large numbers of ERVs have proliferated at very low frequencies in the koala population. Sequence divergence between the 5′- and 3′-long terminal repeats (LTRs) of a provirus can be used as a molecular clock. Within each of ten enKoRVs, the 5′-LTR sequence was identical to the 3′-LTR sequence, suggesting a maximum age for enKoRV invasion of the koala germ line of approximately 22,200–49,900 years ago, although a much younger age is possible. Across the ten proviruses, seven LTR haplotypes were detected, indicating that at least seven different retroviral sequences had entered the koala germ line.