The ciliate Oxytricha is a microbial eukaryote with two nuclei. One nucleus is the differentiated product of a zygotic nucleus produced at mating. Hence Oxytricha possesses a dynamic pair of genomes inside a single cell. Massive DNA deletions and rearrangement produce a highly fragmented but transcriptionally active somatic genome from a complex germline zygotic genome that provides an archive. The differentiation process eliminates nearly all noncoding DNA, including all transposons, and rearranges over 225,000 short DNA segments to produce a mature, somatic genome containing over 16,000 tiny gene-sized chromosomes. Essential to the rearrangement process are thousands of germline copies of telomere-bearing elements (TBEs), a class of Tc1/mariner transposons. We recently annotated more than 10,000 complete and 24,000 partial TBE sequences in the reference germline genome. Phylogenomic analysis reveals that they cluster into four major families, with a preference for either insertion into DNA segments that are retained in the somatic genome or their maintenance at such sites. Availability of a draft germline genome assembly for a second Oxytricha strain has allowed us to characterize TBE insertion sites that differ between the two strains. This has identified novel TBE insertions and suggests that all four TBE families may still be mobile. Many recent insertions are in close proximity to precursor somatic sequences, and several interrupt gene loci, which necessitates their deletion during development. These findings demonstrate that TBE transposon insertion actively contributes to DNA fragmentation during genome evolution in Oxytricha.