Most of the current expression vector based gene therapy protocols fail to achieve clinically significant transgene expression required for treating genetic diseases. Homologous recombination, initially considered to be of limited use for gene therapy because of its low frequency in mammalian cells, has recently emerged as a potential strategy for developing gene therapy. Six recent studies of homologous recombination in mammalian cells are reviewed. Different approaches have been used in these studies including RNA/DNA chimeric oligonucleotides, small or large homologous DNA fragments, or adeno-associated viral vectors. Most of these studies show a reasonable frequency of homologous recombination which warrants further in vivo testing. Homologous recombination based gene therapy has the potential to develop into a powerful therapeutic modality for genetic diseases. It can offer permanent expression and normal regulation of corrected genes in appropriate cells or organs and probably can be used for treating dominantly inherited diseases such as polycystic kidney disease.