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Abstract Background Transposable elements are major evolutionary forces which can cause new genome structure and species diversification. The role of transposable elements in the expansion of nucleotide-binding and leucine-rich-repeat proteins (NLRs), the major disease-resistance gene families, has been unexplored in plants. Results We report two high-quality de novo genomes (Capsicum baccatum and C. chinense) and an improved reference genome (C. annuum) for peppers. Dynamic genome rearrangements involving translocations among chromosomes 3, 5, and 9 were detected in comparison between C. baccatum and the two other peppers. The amplification of athila LTR-retrotransposons, members of the gypsy superfamily, led to genome expansion in C. baccatum. In-depth genome-wide comparison of genes and repeats unveiled that the copy numbers of NLRs were greatly increased by LTR-retrotransposon-mediated retroduplication. Moreover, retroduplicated NLRs are abundant across the angiosperms and, in most cases, are lineage-specific. Conclusions Our study reveals that retroduplication has played key roles for the massive emergence of NLR genes including functional disease-resistance genes in pepper plants. ; This work was supported by a grant from the Agricultural Genome Center of the Next Generation Biogreen 21 Program of RDA (Project No. PJ01127501) and by a grant from the Ministry of Science, ICT, and Future Planning (MSIP) of the Korean government through the National Research Foundation (NRF-2015R1A2A1A01002327) to DC.