Transgenic mice carrying immunoglobulin genes coding for mu heavy chain and kappa light chain have been used to study the mechanisms involved in allelic and isotypic exclusion. We report here that individual cells from transgenic mice carrying a functionally rearranged mu heavy chain gene (capable of generating both membrane and secreted forms of IgM) can rearrange an endogenous mu heavy chain gene and simultaneously produce both transgenic and endogenous IgM. These "double-producing" cells express both endogenous and transgenic IgM in the cytoplasm (detected by immunohistology) and on the cell surface (detected by multiparameter fluorescence-activated cell sorter analysis). In addition, they secrete mixed IgM molecules containing both transgenic and endogenous mu heavy chains (detected in serum by radioimmune assay). The transgenic mice studied also have relatively large numbers of cells that produce endogenous immunoglobulin in the absence of detectable transgenic immunoglobulin ("endogenous-only cells"). The mechanisms that generate double-producing cells and endogenous-only cells appear to be under genetic control because the frequencies of these B-cell populations are characteristic for a given transgenic line. Thus, our findings indicate that more is involved in triggering allelic exclusion than the simple presence or absence of membrane mu heavy chains (as has been previously postulated).