A convenient system for gene targeting that uses hypoxanthine phosphoribosyltransferase (HPRT) minigenes as the selectable marker in HPRT-deficient mouse embryonic stem (ES) cells is described. Improvements to the expression of HPRT minigenes in ES cells were achieved by promoter substitution and the provision of a strong translational initiation signal. The use of minigenes in the positive-negative selection strategy for gene targeting was evaluated and the smaller minigenes were found to be as effective as a more conventional marker—the herpes simplex virus thymidine kinase gene. Minigenes were used to target the DNA repair gene ERCC-1 in ES cells. A new HPRT-deficient ES cell line was developed that contributes with high frequency to the germ line of chimeric animals. The ability to select for and against HPRT minigene expression in the new HPRT-deficient ES cell line will make this system useful for a range of gene-targeting applications.