Mouse genomic DNA sequence extending 634 kb on proximal mouse chromosome 16 was compared to the corresponding human sequence from chromosome 22q11.2. Haploinsufficiency for this region results in velocardiofacial syndrome (VCFS) in humans. The mouse region is rearranged into three conserved blocks relative to human, but gene content and position are highly conserved within these blocks. Examination of the boundaries of one of these blocks suggested that the evolutionary chromosomal rearrangement occurred in the mouse lineage, resulting in inactivation of the mouse orthologue of ZNF74. Sequence analysis identified 21 genes and 15 ESTs. These include 2 novel genes, Srec2 and Cals2, and previously undescribed splice variants of several other genes. Exon discovery was carried out using GRAIL2, MZEF, or comparative analysis across 491 kb of conserved mouse and human sequence. Sequence comparison was highly effective, identifying every gene and nearly every exon without the high frequency of false-positive predictions seen when algorithmic methods were used alone. In combination, these procedures identified every gene with no false-positive predictions. Comparative sequence analysis also revealed regions of extensive conservation among noncoding sequences, accounting for 6% of the sequence. A library of such sequences has been established to form a resource for generalized studies of regulatory and structural elements.