Class switch recombination (CSR) is preceded by germ line transcription that initiates from promoters upstream of switch (S) sequences and terminates downstream of associated constant genes. Previous work showed that germ line transcripts and their processing are required for CSR and that germ line transcription is regulated in a major part by a regulatory region located downstream of the Ig heavy chain locus. This long-range, polarized effect can be disturbed by inserting an expressed neomycine resistance (neo(r)) gene. To contribute to a better understanding of the mechanism of such a long-distance regulation, we generated knock-in mice in which a neo(r) gene was inserted downstream of Igamma3 exon leaving intact all the necessary elements for germ line transcription and splicing. We show that the expressed neo(r) gene interferes with transcription initiation from Igamma3, and that it impairs but does not block S recombination to Cgamma3. Moreover, we show for the first time that the neo(r) gene provides through chimeric neo(r)-Cgamma3 transcripts the necessary elements for splicing of germ line transcripts by activating two novel cryptic splice sites, one in the coding region of the intronless neo(r) gene and the other in the Igamma3-Cgamma3 intron.