The molecular basis of the familial apoE deficiency was investigated by gene cloning and comparative expression studies of the normal and the deficient apoE gene. For the latter studies the apoE genes were placed under the control of the mouse metallothionein I promoter in a bovine papilloma virus vector. The studies showed that in the normal gene the mouse metallothionein I promoter directs the synthesis of normal apoE mRNA and protein. In contrast, in the deficient apoE gene the same promoter directs the synthesis of two abnormal apoE mRNA forms, which are similar to those observed in the peripheral blood monocyte macrophage cultures of the patient. Restriction analysis of the cloned gene and partial DNA sequence has shown an A to G substitution in the penultimate 3' nucleotide of the third intron of the apoE gene. This single base substitution abolishes the correct 3' splice site thus creating two abnormally spliced mRNA forms. The smaller form contains 53 nucleotides and the larger form contains the entire third intron of the apoE gene. Both of these mRNA species contain chain termination codons within the intronic sequence and code for short apoE peptides that are not detectable by gel electrophoretic techniques. These findings show that this form of familial apoE deficiency results from a point mutation in the 3' splice junction of the third intron of the apoE gene. Furthermore, the expression system we have employed to study apoE deficiency can be utilized to analyze a broad spectrum of genetic diseases associated with mRNA processing mutations.