Repeated retroviral infections of vertebrate germlines have made endogenous retroviruses ubiquitous features of mammalian genomes. However, millions of years of evolution obscure many of the immediate repercussions of retroviral endogenisation on host health. We have examined retroviral endogenisation during its earliest stages in the koala (Phascolarctos cinereus), a species undergoing germline invasion by koala retrovirus (KoRV) and affected by high cancer prevalence. We have characterized integration sites (IS) and in the process discovered that recombinant versions of KoRV, replacing much of the KoRV genome with the highly degraded genome of an older endogenous retrovirus, are proliferating within and among koalas. This may represent a genomic defense against retroviral germline colonihzation. We also characterised KoRV integration sites (IS) in tumour and healthy tissues. We find that tumours accumulate novel IS, with proximate genes over-represented for cancer associations. We detect dysregulation of genes containing IS and identify a highly-expressed transduced oncogene. Our data provide insights into the tremendous mutational load suffered by the host during active retroviral germline invasion and some of the countermeasures employed by the host genome, a process repeatedly experienced and overcome during the evolution of vertebrate lineages. We have also explored the retroviral lineage from which KoRV derives and have found related retroviruses in multiple species including models of retroviral germline colonization younger than KoRV.