Transposable elements are ubiquitous genomic parasites with an ancient history of coexistence with their hosts. A few cases have emerged recently where these genetic elements have been recruited for normal function in the host organism. We have identified an expressed hobo/Ac/Tam (hAT) family transposase-like gene in cereal grasses which appears to represent such a case. This gene, which we have called gary, is found in one or two copies in barley, two diverged copies in rice and two very similar copies in hexaploid wheat. No gary homologues are found in Arabidopsis. In all three cereal species, an apparently complete 2.5 kb transposase-like open reading frame is present and nucleotide substitution data show evidence for positive selection, yet the predicted gary protein is probably not an active transposase, as judged by the absence of key amino acids required for transposase function. Gary is expressed in wheat and barley spikes and gary cDNA sequences are also found in rice, oat, rye, maize, sorghum and sugarcane. The short inverted terminal repeats, flanked by an eight-nucleotide host sequence duplication, which are characteristic of a hAT transposon are absent. Genetic mapping in barley shows that gary is located on the distal end of the long arm of chromosome 2H. Wheat homologues of gary map to the same approximate location on the wheat group 2 chromosomes by physical bin-mapping and the more closely related of the two rice garys maps to the syntenic location near the bottom of rice chromosome 4. These data suggest that gary has resided in a single genomic location for at least 60 Myr and has lost the ability to transpose, yet expresses a transposase-related protein that is being conserved under host selection. We propose that the gary transposase-like gene has been recruited by the cereal grasses for an unknown function.