BACKGROUND: Pseudogenes are inheritable genetic elements showing sequence similarity to functional genes but with deleterious mutations. We describe a computational pipeline for identifying them, which in contrast to previous work explicitly uses intron-exon structure in parent genes to classify pseudogenes. We require alignments between duplicated pseudogenes and their parents to span intron-exon junctions, and this can be used to distinguish between true duplicated and processed pseudogenes (with insertions). RESULTS: Applying our approach to the ENCODE regions, we identify about 160 pseudogenes, 10% of which have clear 'intron-exon' structure and are thus likely generated from recent duplications. CONCLUSION: Detailed examination of our results and comparison of our annotation with the GENCODE reference annotation demonstrate that our computation pipeline provides a good balance between identifying all pseudogenes and delineating the precise structure of duplicated genes.