Retrotransposons, which account for approximately 42% of the human genome, have been increasingly recognized as "non-self" pathogen-associated molecular patterns (PAMPs) due to their virus-like sequences. In abnormal conditions such as cancer and viral infections, retrotransposons that are aberrantly expressed due to impaired epigenetic suppression display PAMPs, leading to their recognition by pattern recognition receptors (PRRs) of the innate immune system and triggering inflammation. This viral mimicry mechanism has been observed in various human diseases, including aging and autoimmune disorders. However, recent evidence suggests that retrotransposons possess highly regulated immune reactivity and play important roles in the development and function of the immune system. In this review, I discuss a wide range of retrotransposon-derived transcripts, their role as targets in immune recognition, and the diseases associated with retrotransposon activity. Furthermore, I explore the implications of chimeric transcripts formed between retrotransposons and known gene mRNAs, which have been previously underestimated, for the increase of immune-related gene isoforms and their influence on immune function. Retrotransposon-derived transcripts have profound and multifaceted effects on immune system function. The aim of this comprehensive review is to provide a better understanding of the complex relationship between retrotransposon transcripts and immune defense.