The discovery that cloned DNA introduced into tissue culture cells can undergo homologous recombination at specific chromosomal loci has revolutionized our ability to study gene function in cell culture and in vivo. In theory, this technique, termed gene targeting, allows one to generate any type of mutation in any cloned gene. The kinds of mutations that can be created include null mutations, point mutations, deletions of specific functional domains, exchanges of functional domains from related genes, and gain-of-function mutations in which exogenous cDNA sequences are inserted adjacent to endogenous regulatory sequences. In principle, such specific genetic alterations can be made in any cell line growing in culture. However, not all cell types can be maintained in culture under the conditions necessary for transfection and selection. Over ten years ago, pluripotent embryonic stem (ES) cells derived from the inner cell mass (ICM) of mouse blastocyst stage embryos were isolated and conditions defined for their propogation and maintenance in culture (1, 2). ES cells resemble ICM cells in many respects, including their ability to contribute to all embryonic tissues in chimeric mice. Using stringent culture conditions, the embryonic developmental potential of ES cells can be maintained following genetic manipulations and after many passages in vitro. Furthermore, permanent mouse lines carrying genetic alterations introduced into ES cells can be obtained by transmitting the mutation through the germline by generating ES cell chimeras (described in Chapters 4 and 5). Thus, applying gene targeting technology to ES cells in culture affords researchers the opportunity to modify endogenous genes and study their function in vivo. In initial studies, one of the main challenges of gene targeting was to distinguish the rare homologous recombination events from more commonly occurring random integrations (discussed in Chapter 1). However, advances in cell culture and in selection schemes, in vector construction using isogenic DNA, and in the application of rapid screening procedures have made it possible to identify homologous recombination events efficiently. Since there are numerous publications available that describe basic tissue culture techniques in this chapter we will only describe techniques specific for ES cells.