Maternally and paternally derived alleles can utilize different promoters, but allele-specific differences in cotranscriptional processes have not been reported. We show that alternative polyadenylation sites at a novel murine imprinted gene (H13) are utilized in an allele-specific manner. A differentially methylated CpG island separates polyA sites utilized on maternal and paternal alleles, and contains an internal promoter. Two genetic systems show that alleles lacking methylation generate truncated H13 transcripts that undergo internal polyadenylation. On methylated alleles, the internal promoter is inactive and elongation proceeds to downstream polyadenylation sites. This demonstrates that epigenetic modifications can influence utilization of alternative polyadenylation sites.