The plant genome contains a large number of disease resistance (R) genes that have evolved through diverse mechanisms. Here, we report that a long terminal repeat (LTR) retrotransposon contributed to the evolution of the rice blast resistance gene Pit. Pit confers race-specific resistance against the fungal pathogen Magnaporthe grisea, and is a member of the nucleotide-binding site leucine-rich repeat (NBS-LRR) family of R genes. Compared with the non-functional allele Pit(Npb), the functional allele Pit(K59) contains four amino acid substitutions, and has the LTR retrotransposon Renovator inserted upstream. Pathogenesis assays using chimeric constructs carrying the various regions of Pit(K59) and Pit(Npb) suggest that amino acid substitutions might have a potential effect in Pit resistance; more importantly, the upregulated promoter activity conferred by the Renovator sequence is essential for Pit function. Our data suggest that transposon-mediated transcriptional activation may play an important role in the refunctionalization of additional 'sleeping' R genes in the plant genome.