Mammalian cells selected to resist N-(phosphonacetyl)-L-aspartate (PALA) contain amplified copies of the CAD gene. While a single 7.9-kb mRNA species is detected in PALA-sensitive and most PALA-resistant cell lines, two RNA species (7.9 and 10.2 kb) are detected in two related drug-resistant mutants presumably derived from the same parental cell. In this report we show that the 10.2-kb RNA is produced as a direct consequence of a sequence rearrangement adjacent to the 3' end of the CAD gene in these cell lines. A CAD gene containing the sequence rearrangement was cloned from one of these lines and found to produce both RNA species when transfected into CAD-deficient cells. DNA sequencing and S1 analysis demonstrate that the 10.2-kb RNA is produced by alternative polyadenylation rather than by alternative splicing. Sequence analysis also reveals that several consensus poly(A) addition signals (AATAAA) were brought into close proximity to the CAD gene by virtue of the rearrangement. While sequences adjacent to each of the polyadenylation signals contain additional features postulated to be important for the selection of the site of poly(A) addition, S1 mapping analysis indicates that only one of the polyadenylation signals is used. A comparison of all of these sites suggests that multiple sequence motifs are required to form a functional polyadenylation and cleavage signal.