The phylogenetic placement of the genus Diplonema in relation to fellow phylum members Euglena and Trypanosoma has been uncertain. The spliced leader RNA gene, present in the euglenids and kinetoplastids in distinct forms, was a potential target for resolving this question. The first indication supporting a closer relationship to the kinetoplastids was the recognition of potential spliced leader RNA exon sequences in the genomic DNA of two Diplonema isolates. Examination of total cell RNA revealed transcripts in the anticipated size range at approximately 120 and 130 nt. Specific PCR amplification of a spliced leader RNA gene repeat was performed. The hallmark features of the kinetoplastid-type spliced leader RNA, specifically the 39-nt exon, splice-donor site, Sm-binding site and poly-T tract and the potential to form the requisite stem-loop structures, were found. Diplonema spp. are different from the kinetoplastids by virtue of C residues at positions 4 and 18 in the exon. While the intergenic spacer regions varied in size, each contained the complete sequence or remnants of a 5S ribosomal RNA gene. Possession of a functional spliced leader RNA gene of the kinetoplastid variety in Diplonema supports a closer evolutionary relationship with this group than with the euglenids.