The origin of new genes and of new functions for existing genes are fundamental processes in molecular evolution. Sdic is a newly evolved gene that arose recently in the D. melanogaster lineage. The gene encodes a novel sperm motility protein. It is a chimeric gene formed by duplication of two other genes followed by multiple deletions and other sequence rearrangements. The Sdic gene exists in several copies in the X chromosome, and is presumed to have undergone several duplications to form a tandemly arrayed gene cluster. Given the very recent origin of the gene and the gene cluster, the analysis of the composition of this gene cluster represents an excellent opportunity to study the origin and evolution of new gene functions and the fate of gene duplications. We have analyzed the nucleotide sequence of this region and reconstructed the evolutionary history of this gene cluster. We found that the cluster is composed by four tandem copies of Sdic; these duplicates are very similar but can be distinguished by the unique pattern of insertions, deletions, and point mutations in each copy. The oldest gene copy in the array has a 3' exon that has undergone accelerated diversification, and also shows divergent regulatory sequences. Moreover, there is evidence that this might be the only gene copy in the tandem array that is transcribed at a significant level, expressing a novel sperm-specific protein. There is also a retrotransposon located at the 3' end of each Sdic gene copy. We argue that this gene cluster was formed in the last two million years by at least three tandem duplications and one retrotransposition event.