The high-mobility-group protein HMG-I is a well-characterized nonhistone chromosomal protein that is preferentially expressed in rapidly dividing cells, binds to A. T-rich regions of DNA in vitro, and has been localized to particular regions of mammalian metaphase chromosomes. We isolated eight cDNA clones encoding HMG-I and its isoform HMG-Y from a human Raji cell cDNA library and detected blocks of nucleotide sequence rearrangements in the 5'-untranslated regions of these clones. In addition to this leader sequence variation, five of the eight cDNA clones had either a 33- or 36-base-pair in-frame deletion in their open reading frame (ORF); we found that this shortened ORF encodes the HMG-Y protein isoform. We present evidence that the 5'-untranslated-region and ORF heterogeneity of the cDNA clones is the result of alternative processing of RNA transcripts from a single functional gene. Several additional but probably nonfunctional HMG-I or HMG-Y gene copies exist in the human genome; we isolated and partially sequenced one of these pseudogenes and found that it is a processed HMG-Y retropseudogene.