In northern Australia most koalas (Phascolarctos cinereus) are infected with the gammaretrovirus known as koala retrovirus (KoRV). KoRV is believed to be currently endogenizing into its host. Koalas were first introduced into three Japanese zoos in 1984 and now about 50 koalas are held in eight zoos. In 2007 KoRV was isolated from koalas reared in Japanese zoos, and, for the first time, an infectious molecular clone termed pKoRV522 was constructed. Using the molecular clone and KoRV isolates, we revealed the budding mechanism of KoRV and genomic diversity of KoRVs isolated from Japanese koalas. We found that KoRV utilizes the multivesicular body-sorting pathway. We also discovered a novel KoRV subgroup, named KoRV-J, which utilizes thiamine transport protein 1 as an entry receptor. The original KoRV, which utilizes Pit-1 as an entry receptor, is now named KoRV-A. In two Queensland koalas examined, the copy numbers of KoRV-J was less than 1 copy per cell and varied in tissues. These data, at least in these two koalas, suggest that KoRV-J is an exogenous retrovirus not an endogenous retrovirus.