AbstractMice with alterations to specific endogenous genes can be produced by gene targeting in embryonic stem cells. The field has developed rapidly over the past decade, so that large numbers of mice with different gene deficiencies have been generated. Knockout mice provide an ideal opportunity to analyse the function of individual mammalian genes and to model a range of human inherited disorders. This powerful approach has also identified numerous examples of gene redundancy and has highlighted the need to consider metabolic differences between man and mouse in disease modelling. More sophisticated gene‐targeting methods are now being used to introduce subtle gene alterations. In the future, more refined genetic analysis and genome, rather than individual gene, alterations will be achieved by incorporating site‐specific recombination into targeting strategies. Gene targeting could also make a contribution to improved protocols for gene therapy.