We have isolated two cDNAs encoding human lysosomal beta-galactosidase, the enzyme deficient in GM1-gangliosidosis and Morquio B syndrome, and a beta-galactosidase-related protein. In total RNA from normal fibroblasts a major mRNA of about 2.5 kilobases (kb) is recognized by cDNA probes. A minor transcript of about 2.0 kb is visible only in immunoselected polysomal RNA. A heterogeneous pattern of expression of the 2.5-kb beta-galactosidase transcript is observed in fibroblasts from different GM1-gangliosidosis patients. The nucleotide sequences of the two cDNAs are extensively colinear. However, the short cDNA misses two noncontiguous protein-encoding regions (1 and 2) present in the long cDNA. The exclusion of region 1 in the short molecule introduces a frameshift in its 3'-flanking sequence, which is restored by the exclusion of region 2. These findings imply the existence of two mRNA templates, which are read in a different frame only in the nucleotide stretch between regions 1 and 2. Sequence analysis of genomic exons of the beta-galactosidase gene shows that the short mRNA is generated by alternative splicing. The long and short cDNAs direct the synthesis in COS-1 cells of beta-galactosidase polypeptides of 85 and 68 kDa, respectively. Only the long protein is catalytically active under the assay conditions used, and it is capable of correcting beta-galactosidase activity after endocytosis by GM1-gangliosidosis fibroblasts. The subcellular localization of cDNA-encoded beta-galactosidase and beta-galactosidase-related proteins is different.