The gene encoding variant surface glycoprotein 221 in Trypanosoma brucei is located adjacent to a chromosome end and can be activated with or without a concomitant gene duplication. To test whether transcription initiates within the cloned segment of the 221 gene, we analyzed nascent and stable transcripts. We show here that the 221 coding region and 8.5 kilobases of adjacent upstream DNA are transcribed into nascent RNA at a similar rate when gene 221 is activated without duplication. Since only part of this transcribed upstream segment is transferred with the coding region to another telomere upon duplicative activation of gene 221, we infer that initiation of variant surface glycoprotein gene transcription occurs outside the gene segment that moves into an expression site by gene conversion. Our analysis shows that part of the variant surface glycoprotein 221 transcription unit consists of an unusual 3.5-kilobase tandem array of ca. 50 repeat segments and that a rearrangement in this array accompanies the nonduplicative activation of gene 221. A variant surface glycoprotein pseudogene is located within the transcription unit of gene 221, and we discuss models that account for this unusual situation.