We mutated, by gene targeting, the endogenous hypoxanthine phosphorlbosyi transferase (HPFlT) gene in mouse embryo-derived stem (ES) cells. A specialized construct of the neomycin resistance (NO’) gene was introduced into an exon of a cloned fragment of the Hprf gene and used to transfect ES cells. Among the G418’colonies, l/l000 were also resistant to the base analog &thioguanine (&TG). The G418’, 8-TGr ceils were ail shown to be Hprt-as the result of homologous recombination with the exogenous, neo’-containing, Hprf sequences. We have compared the gene-targeting efficiencies of two classes of neo’-Hprf recombinant vectors: those that replace the endogenous sequence with the exogenous sequence and those that insert the exogenous sequence into the endogenous sequence. The targeting efficiencies of both classes of vectors are strongly dependent upon the extent of homology between exogenous and endogenous sequences. The protocol described herein should be useful for targeting mutations into any gene.