The switch from membrane-bound to secreted IgM is accomplished by producing alternative forms of mRNA from a single mu heavy-chain gene. This process might be controlled at any of three steps--transcription termination, RNA splicing, or RNA cleavage/poly(A) addition. To distinguish between these possibilities, we have constructed a model human mu gene and observed its expression in early- and late-stage murine B cells. In each case, expression of the model gene reflects the state of development of the host cell; i.e., more of the mRNA for membrane-bound IgM is made in early B cells and more of the secreted form is made in late B cells. Using systematic deletions and analyses of RNA products of the model gene, we implicate RNA cleavage/poly(A) addition as the governing reaction. Removal of the cleavage/poly(A) signal for secreted mu mRNA by a series of BAL-31 deletions produces not only a decrease in secreted mu mRNA but also a compensatory increase in the membrane-bound form. Further, transcripts that do not terminate to the 5' side of the membrane anchor exons are found in cells producing only secreted IgM. As defined by these deletions, we establish that the RNA cleavage signal spans at least 35 bases and speculate that it forms an RNA stemloop that may be important in 3' end formation.