Genetic models predict that genomic rearrangement in hybrids can facilitate reproductive isolation and the formation of new species by preventing gene flow between the parent species and hybrid (sunflowers are an example). The mechanism underlying hybridization-induced chromosome remodelling is as yet unknown, although mobile element activity has been shown to be involved in DNA rearrangement in some dysgenic Drosophila hybrids. It has been proposed that DNA methylation evolved as a means of repressing the movement of mobile elements (the host defence model). If such a protective mechanism were to fail, mobile elements could be activated, and could cause major and rapid genome alterations. Here we demonstrate the occurrence of genome-wide undermethylation, retroviral element amplification and chromosome remodelling in an interspecific mammalian hybrid (Macropus eugenii x Wallabia bicolor). Atypically extended centromeres of Macropus eugenii derived autosomes in the hybrid were composed primarily of an unmethylated, amplified retroviral element not detectable in either parent species. These results, taken with the observation of deficient methylation and de novo chromosome change in other mammalian hybrids, indicate that the failure of DNA methylation and subsequent mobile-element activity in hybrids could facilitate rapid karyotypic evolution.