A mixed model production line is a production line where a variety of product models are produced. In U-shaped production lines (called U-lines) used in just-in-time production system, the strategy of mixing product models is often used to provide various types of products to customers in time. Line balancing and model sequencing problems are important for an efficient use of mixed model U-lines. Although the two problems are tightly interrelated with each other, prior researches have considered them separately or sequentially. This paper presents a new method using a coevolutionary algorithm that can solve the two problems at the same time. To promote diversity and search efficiency, in this paper the evolutionary system is based on the localized interactions within and between populations. Methods of selecting environmental individuals and evaluating fitness are developed. Efficient genetic representations and operator schemes are also provided. When designing the schemes, we take into account the features specific to the problems. The experimental results demonstrate that the proposed algorithm is superior to existing approaches.