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Background: Gene innovation by duplication is a fundamental evolutionary process but is difficult to study in humans due to the large size, high sequence identity, and mosaic nature of segmental duplication blocks. The human-specific gene hydrocephalus-inducing 2, HYDIN2, was generated by a 364 kbp duplication of 79 internal exons of the large ciliary gene HYDIN from chromosome 16q22.2 to chromosome 1q21.1. Because the HYDIN2 locus lacks the ancestral promoter and seven terminal exons of the progenitor gene, we sought to characterize transcription at this locus by coupling reverse transcription polymerase chain reaction and long-read sequencing., Results: 5' RACE indicates a transcription start site for HYDIN2 outside of the duplication and we observe fusion transcripts spanning both the 5' and 3' breakpoints. We observe extensive splicing diversity leading to the formation of altered open reading frames (ORFs) that appear to be under relaxed selection. We show that HYDIN2 adopted a new promoter that drives an altered pattern of expression, with highest levels in neural tissues. We estimate that the HYDIN duplication occurred ~3.2 million years ago and find that it is nearly fixed (99.9%) for diploid copy number in contemporary humans. Examination of 73 chromosome 1q21 rearrangement patients reveals that HYDIN2 is deleted or duplicated in most cases., Conclusions: Together, these data support a model of rapid gene innovation by fusion of incomplete segmental duplications, altered tissue expression, and potential subfunctionalization or neofunctionalization of HYDIN2 early in the evolution of the Homo lineage.