A mixed-model approach is proposed for identifying differential gene expression in cDNA microarray experiments. This approach is implemented by two interconnected steps. In the first step, we choose a subset of genes that are potentially expressed differentially among treatments with a loose criterion. In the second step, these potential genes are used for further analyses and data-mining with a stringent criterion, in which differentially expressed genes (DEGs) are confirmed and some quantities of interest (such as gene x treatment interaction) are estimated. By simulating datasets with DEGs, we compare our statistical method with a widely used method, the t-statistic, for single genes. Simulation results show that our approach produces a high power and a low false discovery rate for DEG identification. We also investigate the impacts of various source variations resulting from microarray experiments on the efficiency of DEG identification. Analysis of a published experiment studying unstable transcripts in Arabidopsis illustrates the utility of our method. Our method identifies more novel and biologically interesting unstable transcripts than those reported in the original literature.