The Drosophila gonadal (gdl) gene is a member of a gene cluster that maps cytogenetically to the 71CD interval of chromosome 3. The gene is bordered distally by z600, a gene expressed predominantly during early embryogenesis, and proximally by Eip28/29, a gene regulated by ecdysone in Drosophila cell lines. gdl can be expressed in either of two modes in adults: gdlF expression leads to the transcripts 1300 and 1000, which are found in the ovaries, whereas gdlM expression leads to the transcripts 1500 and 1200, which are found in the testes. In situ hybridization analysis reveals that this expression occurs in the germ line during oogenesis and spermatogenesis. Structural studies identify an unusual gdl sequence organization. The ovarian and testes transcripts differ at their 5' ends because of the utilization of different transcription initiation sites. This result indicates that alternative promoter usage is responsible for sex-specific gdl expression. Within an expression mode, the two transcripts differ at their 3' ends as a result of multiple polyadenylation site usage; one of these sites resides within the 5' exon of the Eip28/29 gene. gdl is overlapped by z600 as well because the z600 transcript is polyadenylated at position +91 of the gdlM transcripts. An analysis of germ-line transformants reveals that gdl can be expressed properly outside the overlapping gene environment because a 1.8-kb DNA region contains all the sequences necessary for gdl sex-specific expression.