We have isolated AE3, a novel gene expressed primarily in brain neurons and in heart. The predicted AE3 polypeptide shares a high degree of identity with the anion exchange and cytoskeletal binding domains of the erythrocyte band 3 protein. Expression of AE3 cDNA in COS cells leads to chronic cytoplasmic acidification and to chloride- and bicarbonate-dependent changes in intracellular pH, confirming that this gene product is an anion exchanger. Characterization of an AE3 mutant lacking the NH2-terminal 645 amino acids demonstrates that the COOH-terminal half of the polypeptide is both necessary and sufficient for correct insertion into the plasma membrane and for anion exchange activity. The NH2-terminal domain may play a role in regulating the activity of the exchanger and may be involved in the structural organization of the cytoskeleton in neurons.