Embryonic stem (ES) cells serve as a potentially unlimited source of cells and tissues to treat a number of genetic and malignant diseases. The differentiation of these cells into specific cell types is an area of very active investigation. One method of manipulating ES cell differentiation is through the alteration of gene expression. There are a multitude of different methods for expressing a target gene in ES cells, but most are limited in their ability to provide spatial, temporal, and quantitative control of gene expression. These properties are important because many developmentally interesting genes are regulated in at least one of these ways. This chapter will address these limitations through the use of an ES cell line with a doxycycline-inducible transgene system. A characterization of this inducible transgene system will be discussed, as well as the use of this system to develop ES-derived long-term engrafting hematopoietic stem cells. This demonstration is one of many possible uses for this powerful and versatile system.