The 3' ends of late mRNAs of the ati gene, encoding the major component of the A-type inclusions, are generated by endoribonucleolytic cleavage at a specific site in the primary transcript [Antczak et al., (1992), Proc. Natl. Acad. Sci. USA 89, 12033-12037]. In this study, sequence analysis of cDNAs of the 3' ends of ati mRNAs showed these mRNAs are 3' polyadenylated at the RNA cleavage site. This suggests that ati mRNA 3' end formation involves cleavage of a late transcript, with subsequent 3' polyadenylation of the 5' cleavage product. The RNA cis-acting element, the AX element, directing orientation-dependent formation of these mRNA 3' ends, was mapped to a 345-bp AluI-XbaI fragment. Deletion analyses of this fragment showed that the boundaries of the AX element are within -5 and +38 of the RNA cleavage site. Scanning mutagenesis showed that the AX element contains at least two subelements: subelement I, 5'-UUUAU downward arrowCCGAUAAUUC-3', containing the cleavage site ( downward arrow), separated from the downstream subelement II, 5'-AAUUUCGGAUUUGAAUGC-3', by a 10-nucleotide region, whose composition may be altered without effect on RNA 3' end formation. These features, which differ from those of other elements controlling RNA processing, suggest that the AX element is a component of a novel mechanism of RNA 3' end formation.