Two distinct chicken U4 RNA genes have been cloned and characterized. They are closely linked within 465 base pairs of each other and have the same transcriptional orientation. The downstream U4 homology is a true gene, based on the criteria that it is colinear with chicken U4B RNA and is expressed when injected into Xenopus laevis oocytes. The upstream U4 homology, however, contains seven base substitutions relative to U4B RNA. This sequence may be a nonexpressed pseudogene, but the pattern of base substitutions suggests that it more probably encodes a variant yet functional U4 RNA product not yet characterized at the RNA level. In support of this, the two U4 genes have regions of homology with each other in their 5'-flanking DNA at two positions known to be essential for the efficient expression of vertebrate U1 and U2 small nuclear RNA genes. In the case of U1 and U2 RNA genes, the more distal region (located near position-200 with respect to the RNA cap site) is known to function as a transcriptional enhancer. Although this region is highly conserved in overall structure and sequence among U1 and U2 RNA genes, it is much less conserved in the chicken U4 RNA genes reported here. Interestingly, short sequence elements present in the -200 region of the U4 RNA genes are inverted (i.e., on the complementary strand) relative to their usual orientation upstream of U1 and U2 RNA genes. Thus, the -200 region of the U4 RNA genes may represent a natural evolutionary occurrence of an enhancer sequence inversion.