We have developed an approach to identify and localize cDNAs encoded by YACs. In this scheme, a YAC truncation vector containing a cDNA library is used to interrupt the YAC by homologous recombination in yeast. This approach generates YACs truncated at the site of recombination between the cDNA and the cognate YAC sequence and thus localizes the gene in the YAC. This method results in the production of a large percentage of true recombinants identifying gene encoding regions of the genome. This approach is shown to identify an unique EST sequence from a YAC in Xp22, the recently described transketolase-like gene in a YAC from Xq28 and a putative kinesin-like gene in Xq13. This system should also be useful in the mapping of YACs by targeted integration. We have constructed a new telomere truncation vector, pGR8, which incorporates two selectable markers, HIS5 and LYS2. This vector overcomes problems of previous vectors including: incompatibility with most YAC libraries, vector homology with the YAC arms and high backgrounds resulting from the use of a single selectible marker. A third counterselection with 5-fluoroorotic acid (5FOA) against yeast clones retaining the URA3 gene was also employed to reduce background further. Therefore, this vector and approach should be useful to the transcriptional analysis of YAC maps of any genome.