The paleopolyploid soybean genome was investigated by sequencing homeologous BAC clones anchored by duplicate N-hydroxycinnamoyl/benzoyltransferase (HCBT) genes. The homeologous BACs were genetically mapped to linkage groups C1 and C2. Annotation of the 173,747- and 98,760-bp BACs showed that gene conservation in both order and orientation is high between homeologous regions with only a single gene insertion/deletion and local tandem duplications differing between the regions. The nucleotide sequence conservation extends into intergenic regions as well, probably due to conserved regulatory sequences. Most of the homeologs appear to have a role in either transcription/DNA binding or cellular signaling, suggesting a potential preference for retention of duplicate genes with these functions. Reverse transcriptase-PCR analysis of homeologs showed that in the tissues sampled, most homeologs have not diverged greatly in their transcription profiles. However, four cases of changes in transcription were identified, primarily in the HCBT gene cluster. Because a mapped locus corresponds to a soybean cyst nematode (SCN) QTL, the potential role of HCBT genes in response to SCN is discussed. These results are the first sequenced-based analysis of homeologous BACs in soybean, a diploidized paleopolyploid.