The maize Activator/Dissociation (Ac/Ds) elements are members of the hAT (hobo, Ac, and Tam3) superfamily of type II (DNA) transposons that transpose through a "cut-and-paste" mechanism. Previously, we reported that a pair of Ac ends in reversed orientation is capable of undergoing alternative transposition reactions that can generate large-scale chromosomal rearrangements, including deletions and inversions. We show here that rearrangements induced by reversed Ac ends transposition can join the coding and regulatory sequences of two linked paralogous genes to generate a series of chimeric genes, some of which are functional. To our knowledge, this is the first report demonstrating that alternative transposition reactions can recombine gene segments, leading to the creation of new genes.