Macronuclear chromosomes of the ciliated protozoan Oxytricha nova terminate with a single-stranded (T4G4)2 overhang. The (T4G4)2 telomeric overhang is tenaciously bound by a protein heterodimer. We have cloned and sequenced the gene encoding the 41-kDa subunit of this telomere binding protein. The predicted amino acid sequence comprises two distinct regions, a carboxyl-terminal two-thirds that is 23% lysine and bears similarity to histone H1 and an amino-terminal one-third containing a hydrophobic stretch of about 15 amino acids. Two macronuclear versions of the gene differ in nucleotide sequence at several positions, but the derived polypeptides differ only at a single position, Ser-110 or Ala-110. Both versions harbor a small intron. The existence of this intron demonstrates that, despite the elimination of 95% of the micronuclear genome from the developing macronucleus, at least some noncoding DNA is retained during macronuclear development of hypotrichous ciliates.