The transformer (tra) gene regulates all aspects of somatic sexual differentiation in Drosophila melanogaster females and has no function in males. We have isolated the tra gene as part of a 200 kb chromosomal walk. The 25 kb region around tra contains four genetically identified complementation groups and at least six transcriptional units. Germ-line transformation experiments indicate that a fragment of 2 kb is sufficient to supply tra+ function. Mapping of cDNAs from tra and from the adjacent genes indicates that the tra+ transcription unit is 1.2 kb or less. This transcription unit gives rise to a 1.0 kb RNA that is female-specific and a 1.2 kb RNA that is present in both sexes. tra+ and the gene at the 3' side overlap slightly in the 3' ends of their RNA coding sequences. These results suggest that tra+ function is regulated at the level of production of the female-specific tra RNA. The fact that a tra transcript is found in males raises interesting possibilities for how tra expression is controlled.