The dunce (dnc) gene of Drosophila melanogaster encodes cAMP phosphodiesterase (PDEase) and is required for learning/memory and female fertility. The gene is structurally complex, demonstrated in part by Northern blotting experiments which detected multiple RNAs ranging in size from 4.2 to 9.6 kb (1 kb = 10(3) bases or base-pairs). To characterize these RNAs and to understand their sequence heterogeneity, we isolated and analyzed 29 new and independent cDNA clones representing the dnc RNAs. Restriction mapping, hybridization analysis and sequence determination of these cDNA clones and the corresponding genomic exons resolved these into six different classes. Exons defined by the cDNA clones are distributed over more than 148 kb of genomic DNA, with some exons being used alternatively among the RNAs. The RNAs are transcribed from at least three initiation sites: two of these were mapped by parallel S1-nuclease and primer extension experiments. In addition, some of the heterogeneity is generated by using varying lengths of a 3'-untranslated trailer sequence. Altogether, the results indicate that the size and sequence heterogeneity of dnc transcripts results from transcription initiation at multiple sites, alternative splicing, and processes which generate different 3' ends. The existence of multiple protein products is suggested by the alternative use of exons which code for portions of the open reading frame. The protein variation potentially includes N-terminal differences coded for by transcript-specific 5' exons and internal differences arising from the optional inclusion of a 39 base-pair exon and from the alternative use of two 3' splice sites separated by six base-pairs. Expression of a cDNA clone in yeast containing a large portion of the open reading frame produced cAMP PDEase activity identical in properties to the Drosophila enzyme affected by the dnc mutation. The results suggest that the remarkable structural complexity of dnc may reflect an intricate control of the spatial and/or temporal expression of various isoforms of cAMP PDEase.