The cha-1 gene of Caenorhabditis elegans encodes choline acetyl-transferase (the acetylcholine synthetic enzyme). The C. elegans unc-17 gene encodes a synaptic vesicle-associated acetylcholine transporter. The two genes thus define sequential biochemical steps in the metabolism of the neurotransmitter acetylcholine. Cloning, sequencing, and molecular analysis of the unc-17 region indicate that cha-1 and unc-17 transcripts share a 5' untranslated exon, and the rest of the unc-17 transcript is nested within the long first intron of cha-1. Thus, two proteins with related functions but with no sequences in common are produced as a result of alternative splicing of a common mRNA precursor. The structure of this transcription unit suggests a novel type of coordinate gene expression, and a temporal processing model is proposed for the regulation of cha-1 and unc-17 expression.