Background Transposable elements (TEs) have the potential to impact genome structure, function and evolution in profound ways. In order to understand the contribution of transposable elements (TEs) to Heliconius melpomene, we queried the H. melpomene draft sequence to identify repetitive sequences. Results We determined that TEs comprise ~25% of the genome. The predominant class of TEs (~12% of the genome) was the non-long terminal repeat (non-LTR) retrotransposons, including a novel SINE family. However, this was only slightly higher than content derived from DNA transposons, which are diverse, with several families having mobilized in the recent past. Compared to the only other well-studied lepidopteran genome, Bombyx mori, H. melpomene exhibits a higher DNA transposon content and a distinct repertoire of retrotransposons. We also found that H. melpomene exhibits a high rate of TE turnover with few older elements accumulating in the genome. Conclusions Our analysis represents the first complete, de novo characterization of TE content in a butterfly genome and suggests that, while TEs are able to invade and multiply, TEs have an overall deleterious effect and/or that maintaining a small genome is advantageous. Our results also hint that analysis of additional lepidopteran genomes will reveal substantial TE diversity within the group.