Koalas in US zoos were screened for koala retroviruses in an effort to determine the viral mechanism for koala retrovirus induced malignant neoplasias. Although the previously characterized koala retrovirus (KoRV-A) was present in all US koalas, some koalas were also infected by a novel koala retrovirus, termed KoRV-B. The genome of KoRV-B is highly related to KoRV-A; however, certain regions within the viral genome, including the envelope gene, displayed diversity. These differences are sufficient to allow KoRV-B to employ a receptor (a thiamine transporter) that differs from that used by KoRV-A (a phosphate transporter). Of great interest was the strong correlation between the presence of KoRV-B and malignant disease (lymphomas) in koalas. All koalas that died from lymphoma were KoRV-B positive as were the dead joeys ejected from the pouch of KoRV-B positive dams. We found no evidence of KoRV-B transmission from sires to offspring but did from dam to offspring through de novo infection, rather than via genetic inheritance like KoRV-A. Detection of KoRV-B in native Australian koalas should provide a history, and a mode for remediation, of leukemia/lymphoma currently endemic in this population.