The development of gene targeting technology, the exchange of an endogenous allele of a target gene for a mutated copy via homologous recombination, and the application of this technique to murine embryonic stem cells has made it possible to alter the germ-line of mice in a predetermined way. Gene targeting has enabled researchers to generate mouse strains with defined mutations in their genome allowing the analysis of gene function in vivo. This review presents the essential tools and methodologies used for gene targeting that have been developed over the past decade. Special emphasis has been laid on the available embryonic stem cell lines and the importance of the genetic background. Also, the state-of-the art of gene targeting approaches in species other than mice will be discussed.