The cystic fibrosis transmembrane conductance regulator (CFTR) gene shows a complex mechanism of tissue-specific and temporal regulation. Expression of the sheep and human CFTR genes shows a gradual decline during lung development, from the early mid-trimester through to term. Alternative upstream exons of CFTR have been identified in several species but their functional role remains obscure. We identified a novel 5' exon of the sheep CFTR gene (ov1a) that occurs in two splice forms (ov1aL and ov1aS), which are both mutually exclusive with exon 1. CFTR transcripts including ov1aL and ov1aS are present at low levels in many sheep tissues, however ov1aS shows temporal and spatial regulation during fetal lung development, being most abundant when CFTR expression levels start to decline. Alternative 5' exons -1a and 1a in the human CFTR gene also show changes in expression levels through lung development. Evaluation of ov1aL and ov1aS by Mfold reveals the potential to form extremely stable secondary structures which would cause ribosomal subunit detachment. Further, the loss of exon 1 from the CFTR transcript removes motifs that are crucial for normal trafficking of the CFTR protein. Recruitment of these alternative upstream exons may represent a novel mechanism of developmental regulation of CFTR expression.