Historically, duplicate genes have been regarded as a major source of novel genetic material. However, recent work suggests that chimeric genes formed through the fusion of pieces of different genes may also contribute to the evolution of novel functions. To compare the contribution of chimeric and duplicate genes to genome evolution, we measured their prevalence and persistence within Drosophila melanogaster. We find that ~80.4 duplicates form per million years, but most are rapidly eliminated from the genome, leaving only 4.1% to be preserved by natural selection. Chimeras form at a comparatively modest rate of ~11.4 per million years but follow a similar pattern of decay, with ultimately only 1.4% of chimeras preserved. We propose two mechanisms of chimeric gene formation, which rely entirely on local, DNA-based mutations to explain the structure and placement of the youngest chimeric genes observed. One involves imprecise excision of an unpaired duplication during large-loop mismatch repair, while the other invokes a process akin to replication slippage to form a chimeric gene in a single event. Our results paint a dynamic picture of both chimeras and duplicate genes within the genome and suggest that chimeric genes contribute substantially to genomic novelty.