An understanding of the mutational and evolutionary mechanisms underlying the emergence of novel genes is critical to studies of phenotypic and genomic evolution. Here we describe a new example of a recently formed chimeric fusion gene that occurs in Drosophila guanche, D. madeirensis, and D. subobscura. This new gene, which we name Adh-Twain, resulted from an Adh mRNA that retrotransposed into the Gapdh-like gene, CG9010. Adh-Twain is transcribed; its 5' promoters and transcription patterns appear similar to those of CG9010. Population genetic and phylogenetic analyses suggest that the amino acid sequence of Adh-Twain evolved rapidly via directional selection shortly after it arose. Its more recent history, however, is characterized by slower evolution consistent with increasing functional constraints. We present a model for the origin of this new gene and discuss genetic and evolutionary factors affecting the evolution of new genes and functions.