Most cell lines which secrete immunoglobulin kappa chains retain their lambda light chain genes in the germline configuration. We report that the lambda variable (V lambda) region is nevertheless transcribed in such kappa-secreting cells at a steady-state level of 1-10 RNA molecules per cell. These transcripts are developmentally regulated since they are not detectable in cell lines representative of earlier stages of B-lymphocyte differentiation. Therefore, the same cellular components which recognize and activate the unrearranged V lambda segment may also regulate the expression of the productive immunoglobulin genes. V lambda transcripts are initiated at the lambda gene cap site, include the variable region, and extend approximately 175 nucleotides into the adjacent spacer DNA. The transcripts are polyadenylated, properly spliced and transported into the cytoplasm. Interestingly, the spacer sequence contains an open reading frame which extends the V lambda coding region for an additional 37 amino acids. It is likely that V lambda transcripts are translated into an elongated protein which may play a regulatory role in B-lymphocyte differentiation.