Carnitine octanoyltransferase (COT) transports medium-chain fatty acids through the peroxisome. During isolation of a COT clone from a rat liver library, a cDNA in which exon 2 was repeated, was characterized. Reverse transcription-PCR amplifications of total RNAs from rat liver showed a three-band pattern. Sequencing of the fragments revealed that, in addition to the canonical exon organization, previously reported [Choi, S. J. et al. (1995) Biochim. Biophys. Acta 1264, 215-222], there were two other forms in which exon 2 or exons 2 and 3 were repeated. The possibility of this exonic repetition in the COT gene was ruled out by genomic Southern blot. To study the gene expression, we analyzed RNA transcripts by Northern blot after RNase H digestion of total RNA. Three different transcripts were observed. Splicing experiments also were carried out in vitro with different constructs that contain exon 2 plus the 5' or the 3' adjacent intron sequences. Our results indicate that accurate joining of two exons 2 occurs by a trans-splicing mechanism, confirming the potential of these structures for this process in nature. The trans-splicing can be explained by the presence of three exon-enhancer sequences in exon 2. Analysis by Western blot of the COT proteins by using specific antibodies showed that two proteins corresponding to the expected Mr are present in rat peroxisomes. This is the first time that a natural trans-splicing reaction has been demonstrated in mammalian cells.