Human embryonic stem cells (hESCs) possess unique properties for studying mechanisms controlling cell fate commitment during early mammalian development. Gain of function is a common strategy to study the function of specific genes involved in these mechanisms. However, transgene toxicity can be a major limitation, especially with factors influencing proliferation or differentiation. Here, we describe an efficient method based on the inducible recombinase Cre-ERT2 for conditional gene expression in hESCs and their differentiated derivatives. Using this approach, we have established several hESC sublines inducible for the expression of the enhanced green fluorescent protein and the transforming growth factor beta family member Nodal. Together, these results demonstrate that Cre-ERT2 can be used to control gene expression in undifferentiated and differentiated cells, thereby providing the first conditional transgene expression system that works effectively in hESCs. Disclosure of potential conflicts of interest is found at the end of this article.