Deficiency of IDs activity results in Hunter Syndrome (mucopolysaccharidosis type II), a fatal X-linked recessive disorder. We report characterization of 28 cosmids around the IDS locus in Xq28. Four overlapping cosmids have been sequenced in their entirety generating a 130-kb contig. These studies show the fine structure of the IDS gene and identify an IDS pseudogene-like structure located 20 kb distal to the active gene. Two novel genes have also been identified in this sequence, and one of these genes is also locally duplicated. Both homologs are expressed, and a number of alternative transcript products have been characterized. The presence of a highly conserved pseudogene-like structure within a larger duplicated region close to the IDS gene has significant implications for the study of mutations at this locus.