The molecular organization of the dunce gene of Drosophila melanogaster has proved to be particularly complex, with two divergently transcribed genes, Sgs-4 and Pig-1, nested within its 79 kb intron (1). Here we report the identification and the molecular characterization of a third gene nested within the transcription unit of dunce. This newly identified gene is located nearly 6 kb downstream Pig-1, within a more upstream dunce intron. The gene is developmentally regulated and transcribed with the same polarity of dunce; several lines of evidence indicate that it might encode for a salivary gland secreted (Sgs) protein.