A cosmid clone covering a region of high olfactory receptor (OR) gene density inside the OR gene cluster on human chromosome 17 (17p13.3) was subjected to shotgun automated DNA sequencing. The resulting 40-kb sequence revealed three known OR coding regions, as well as a new OR pseudogene (OR17-25), fused to one of the previously identified OR genes (OR17-24). The suggested mechanism for the generation of this doublet structure involves an initial duplication mediated by flanking repeats and a subsequent deletion via nonhomologous recombination. Sequence analysis further suggests that the two other OR genes present in the cosmid (OR17-40 and OR17-228) may have evolved by ancient tandem duplication of an 11-kb fragment, mediated by recombination between mammalian-wide interspersed repeats. The duplicated genes appear to be complete and potentially functional. Their conserved structure reveals a long upstream intron and a previously uncharacterized 5' noncoding exon. No additional genes could be discerned in the cosmid, suggesting that the cluster may be part of a dedicated OR subgenome.