The Drosophila melanogaster Gart gene encodes three enzymatic activities in the pathway for purine de novo synthesis. Alternative processing of the primary transcript leads to the synthesis of two overlapping polypeptides. The coding sequence for both polypeptides is interrupted by an intron that contains a functional cuticle protein gene encoded on the opposite DNA strand. Here we show that this nested organization also exists at the homologous locus of a distantly related species, Drosophila pseudoobscura. In both species, the intronic cuticle gene is expressed in wandering larvae and in prepupae. Remarkably, there are 24 different highly conserved noncoding segments within the intron containing the cuticle gene. These are found upstream of the transcriptional start, at the 3' end, and even within the single intronic gene intron. Other introns in the purine gene, including the intron at which alternative processing occurs, show no such homologies. It seems likely that at least some of the conserved noncoding regions are involved in specifying the high level developmental expression of the cuticle gene. We discuss the possibility that shared cis-acting regulatory sites might enhance transcription of both genes and help explain their nested arrangement.