We have inactivated the endogenous apolipoprotein E (apoE) gene by using gene targeting in mouse embryonic stem (ES) cells. Two targeting plasmids were used, pJPB63 and pNMC109, both containing a neomycin-resistance gene that replaces a part of the apoE gene and disrupts its structure. ES cell colonies targeted after electroporation with plasmid pJPB63 were identified by the polymerase chain reaction (PCR) followed by genomic Southern analysis. Of 648 G418-resistant colonies analyzed, 9 gave a positive signal after PCR amplification, and 5 of them were confirmed as targeted by Southern blot analysis. The second plasmid, pNMC109, contains the negatively selectable thymidine kinase gene in addition to the neomycin-resistance gene. After electroporation with this plasmid, 177 colonies resistant both to G418 and ganciclovir were analyzed; 39 contained a disrupted apoE gene as determined by Southern blotting. Chimeric mice were generated by blastocyst injection with 6 of the targeted lines. One of the lines gave strong chimeras, three of which transmitted the disrupted apoE gene to their progeny. Mice homozygous for the disrupted gene were produced from the heterozygotes; they appear healthy, even though they have no apolipoprotein E in their plasma.