Using a magnetic beads-mediated cDNA selection procedure and a fetal brain expression library, we identified a transcriptional unit within a cosmid positive for the marker D11S384. Pursuit of its full-length cDNA led to the cloning of the third candidate gene (CAND3) we studied in our quest for the ataxia-telangiectasia (A-T) gene, ATM. CAND3 spans approximately 140 kb of genomic DNA and is located immediately centrimeric to ATM, with 544 bp of DNA separating the two genes. CAND3 encodes two ubiquitously expressed transcripts of approximately 5.8 kb and approximately 4.6 kb that are divergently transcribed from a promoter region common to ATM. Nucleotide sequence was determined for one of its alternately spliced transcripts. The predicted protein has 1175 amino acids and is novel in sequence, with only weak homologies to transcriptional factors, nucleoporin protein, and protein kinases, including members of the phosphatidylinositol 3-kinase (PI-3 kinase) family. Although neither homology to ATM nor any mutation of CAND3 in A-T patients has been found, the head-to-head arrangement of CAND3 and ATM, with expression of both housekeeping genes from a common stretch of 544 bp intergenic DNA, suggests a bi-directional promoter possibly for co-regulation of biologically related functions. YACs, BACs, cosmids, and STSs are defined to aid in further study of this gene.