It has been suggested that insertions and deletions (indels) have contributed to the sequence divergence between the human and chimpanzee genomes more than do nucleotide changes (3% vs. 1.2%). However, although there have been studies of large indels between the two genomes, no systematic analysis of small indels (i.e., indels </= 100 bp) has been published. In this study, we first estimated that the false-positive rate of small indels inferred from human-chimpanzee pairwise sequence alignments is quite high, suggesting that the chimpanzee genome draft is not sufficiently accurate for our purpose. We have therefore inferred only human-specific indels using multiple sequence alignments of mammalian genomes. We identified >840,000 "small" indels, which affect >7000 UCSC-annotated human genes (>11,000 transcripts). These indels, however, amount to only approximately 0.21% sequence change in the human lineage for the regions compared, whereas in pseudogenes indels contribute to a sequence divergence of 1.40%, suggesting that most of the indels that occurred in genic regions have been eliminated. Functional analysis reveals that the genes whose coding exons have been affected by human-specific indels are enriched in transcription and translation regulatory activities but are underrepresented in catalytic and transporter activities, cellular and physiological processes, and extracellular region/matrix. This functional bias suggests that human-specific indels might have contributed to human unique traits by causing changes at the RNA and protein level.