Two steps of gene targeting were used to replace the p53 gene with the E. coli beta-galactosidase (lacZ) gene in mouse embryonic stem (ES) cells. The first targeting vector consisted of neo and herpes simplex virus thymidine kinase (HSV-tk) genes as a neo-tk cassette in the middle of the targeting vector. At the first targeting, the homologous recombinants became G418 resistant and ganciclovir (GANC) sensitive and were selected by G418 alone. At the second targeting, homologous recombination reciprocally exchanged the neo-tk casette in the ES cell chromosome with the lacZ fragment in the second targeting vector and thus made the ES cells GANC resistant. We obtained two ES cell clones, in which the p53 gene for both had been replaced with a totally non-homologous sequence of the lacZ gene. The germ-line transmission of the manipulated ES cells also demonstrated that the entire procedure had no detrimental effects on ES cells at all.