Oligonucleotide-mediated gene targeting is an attractive alternative to current procedures to subtly modify the genome of mouse embryonic stem (ES) cells. However, oligonucleotide-directed substitution, insertion or deletion of a single or a few nucleotides was hampered by DNA mismatch repair (MMR). We have developed strategies to circumvent this problem based on findings that the central MMR protein MSH2 acts in two different mismatch recognition complexes: MSH2/MSH6, which mainly recognizes base substitutions; and MSH2/MSH3, which has more affinity for larger loops. We found that oligonucleotide-mediated base substitution could effectively be obtained upon transient suppression of MSH2 protein level, while base insertions were effective in ES cells deficient for MSH3. This method allows substitution of any codon of interest in the genome.