Transposons drive genome innovation, yet how they evade somatic piRNA defenses, reach the germline, and rewire host genes with limited cost remain unclear. Using comparative long-read sequencing in cultured Drosophila ovarian somatic cells, we show that the long terminal repeat transposon Springer modulates host gene expression through promoter-proximal intronic insertions at an AT-rich motif. Its 5′ long terminal repeat initiates transcription that splices into downstream host exons, expanding isoform diversity without adding coding sequence. We catalog 72 Springer -driven isoforms, highlighting its broad mutagenic potential. In parallel, we find that the Flamenco ( Flam ) uni-strand piRNA cluster, the principal source of somatic piRNAs, undergoes structural remodeling in ovarian somatic cells, replacing antisense transposon fragments with forward-oriented copies. This remodeling reshapes piRNA populations and erodes silencing of specific elements, including Springer . This relaxation of somatic repression may create conditions permissive for continued transposon activity, with possible broader implications for genome change. Our findings suggest that Flam plasticity can couple transposon activity to genome rewiring, with potential evolutionary consequences.