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Background  Catalytic RNAs, or ribozymes, are regarded as fossils of a prebiotic RNA world that have remained in the genomes of modern organisms. The simplest ribozymes are the small self-cleaving RNAs, like the hammerhead ribozyme, which have been historically considered biological oddities restricted to some RNA pathogens. Recent data, however, indicate that small self-cleaving ribozymes are widespread in genomes, although their functions are still unknown.    Results  We reveal that hammerhead ribozyme sequences in plant genomes form part of a new family of small non-autonomous  retro transposons with hammerhead ribo zymes , referred to as  retrozymes . These elements contain two long terminal repeats of approximately 350 bp, each harbouring a hammerhead ribozyme that delimitates a variable region of 600–1000 bp with no coding capacity. Retrozymes are actively transcribed, which gives rise to heterogeneous linear and circular RNAs that accumulate differentially depending on the tissue or developmental stage of the plant. Genomic and transcriptomic retrozyme sequences are highly heterogeneous and share almost no sequence homology among species except the hammerhead ribozyme motif and two small conserved domains typical of Ty3-gypsy long terminal repeat retrotransposons. Moreover, we detected the presence of RNAs of both retrozyme polarities, which suggests events of independent RNA-RNA rolling-circle replication and evolution, similarly to that of infectious circular RNAs like viroids and viral satellite RNAs.    Conclusions  Our work reveals that circular RNAs with hammerhead ribozymes are frequently occurring molecules in plant and, most likely, metazoan transcriptomes, which explains the ubiquity of these genomic ribozymes and suggests a feasible source for the emergence of circular RNA plant pathogens.    Electronic supplementary material  The online version of this article (doi:10.1186/s13059-016-1002-4) contains supplementary material, which is available to authorized users.

Retrozymes are a unique family of non-autonomous retrotransposons with hammerhead ribozymes that propagate in plants through circular RNAs