The rat erbA alpha locus encodes two overlapping mRNAs, alpha 1 and alpha 2, which are identical except for their most 3' exons. alpha 1 mRNA encodes a thyroid hormone receptor, while alpha 2 encodes an altered ligand binding domain of unknown function. Previous studies have shown that the ratio of alpha 1 to alpha 2 is highest in cells expressing a high level of a third RNA, Rev-ErbA alpha mRNA, which is transcribed in the opposite direction and is complementary to alpha 2 but not alpha 1 mRNA. It was hypothesized that base pairing with Rev-ErbA alpha blocks splicing of alpha 2 mRNA, thereby favoring formation of the non-overlapping alpha 1. To test this model, a system was developed in which alpha 2 pre-mRNAs were accurately spliced in vitro. Splicing was inhibited by the addition of a 5-fold excess of antisense RNAs containing the 3' end of Rev-ErbA alpha mRNA. Both an antisense RNA extending across the 3' splice site and a shorter RNA complementary only to exon sequences efficiently blocked splicing. However, splicing was only inhibited by complementary RNAs. These observations are consistent with a mechanism in which base pairing with a complementary RNA regulates alternative processing of alpha 1 and alpha 2 mRNAs.