Rats and mice have two, equally expressed, nonallelic genes encoding preproinsulin (genes I and II). Cytological hybridization with metaphase chromosomes indicated that both genes reside on rat chromosome 1 but are approximately 100,000 kilobases apart. In mice the two genes reside on two different chromosomes.DNA sequence comparisons of the gene-flanking regions in rats and nmice indicated that the preproinsulin gene I has lost one of the two introns present in gene II, is flanked by a long (41-base) direct repeat, and has a remnant of a polydeoxyadenylate acid tract preceding the downstream direct repeat. These structural features indicated that gene I was generated by an RNA-mediated duplication-transposition event involving a transcript of gene II which was initiated upstream from the normal capping site. Sequence divergence analysis indicated that the pair of the original gene and its retroposed, but functional, counterpart (which appeared about 35 million years ago) is maintained by strong negative selection operating primarily on the segments encoding the chains of the mature hormone, whereas the segments encoding the parts of the polypeptide that are eliminated during processing and also the introns and the flanking regions are evolving neutrally.Rats (as well as mice and three fish species) have two insulins instead of one, in contrast to other organisms (13,23). These rat hormones are the products of two nonallelic preproinsulin genes (57) that are almost equally expressed (11). Characterization of the duplicated genes (36), isolated from a rat chromosomal DNA library, indicated a significant structural difference between them. The gene for preproinsulin I has a single 119-base-pair (bp) intron interrupting the segment corresponding to the 5' noncoding region of the mRNA, whereas the other gene, encoding preproinsulin II, contains in addition to this small intron a second 499-bp intron interrupting the segment encoding the C-peptide. Since the structures of the unique chicken (46) and human (2, 62) genes are similar to that of the rat gene II (two introns at corresponding positions) we concluded that the two-intron organization corresponds to that of the common ancestor and that introns can be lost during evolution (46). This conclusion was strengthened by the subsequent determination of the structures of the unique dog (30) and guinea pig (7) preproinsulin genes, which are of the twointron type.Intron loss was subsequently documented in a mouse ot-globin pseudogene (45, 69) and later in other pseudogenes that exhibit clearly the features of processed genes (22; see references 34, 56, and 68 for reviews). These observations raised the possibility that the rat preproinsulin I gene was a * Corresponding author. retroposon (51) that had been generated by an RNAmediated duplication-transposition event but which for some reason remained functional. To examine this possibility we mapped the chromosomal location of the two genes and characterized their flanking regions by DNA sequencing to define the break po...