Background: Freshwater planarians are widely used as models for investigation of pattern formation and studies on genetic variation in populations. Despite extensive information on the biology and genetics of planaria, the occurrence and distribution of viruses in these animals remains an unexplored area of research. Results: Using a combination of Suppression Subtractive Hybridization (SSH) and Mirror Orientation Selection (MOS), we compared the genomes of two strains of freshwater planarian, Girardia tigrina. The novel extrachromosomal DNA-containing virus-like element denoted PEVE (Planarian Extrachromosomal Virus-like Element) was identified in one planarian strain. The PEVE genome (about 7.5 kb) consists of two unique regions (Ul and Us) flanked by inverted repeats. Sequence analyses reveal that PEVE comprises two helicase-like sequences in the genome, of which the first is a homolog of a circoviral replication initiator protein (Rep), and the second is similar to the papillomavirus E1 helicase domain. PEVE genome exists in at least two variant forms with different arrangements of single-stranded and double-stranded DNA stretches that correspond to the Us and Ul regions. Using PCR analysis and whole-mount in situ hybridization, we characterized PEVE distribution and expression in the planarian body. Conclusions: PEVE is the first viral element identified in free-living flatworms. This element differs from all known viruses and viral elements, and comprises two potential helicases that are homologous to proteins from distant viral phyla. PEVE is unevenly distributed in the worm body, and is detected in specific parenchyma cells. © 2002 Rebrikov et al; licensee BioMed Central Ltd.