Genetic modification of mice by homologous recombination has rapidly become a central tool within molecular medicine and molecular biology. The use of such techniques allows precise mutation of single genes and study of the direct consequences in intact animals. A decade has passed since the a series of landmark studies demonstrated the feasibility of genetically modifying embryonic stem cells in mice by homologous recombination. This initiated the whole field of gene targeting, or "knockout" technology in mice. This article reviews briefly the historical and technical development of knockout technology, and the application to selected mouse models within cancer biology, immunology and neurobiology. Refinements of this type of genetic modification, with tissue- or time-specific genetic ablation or mutations, represent the next step in technology development. The combined use of Cre/loxP and homologous recombination has opened for a wide spectrum of possibilities, reaching far beyond null mutations. The rapid evolvement of the whole field has opened for genetic engineering--in the presise sense of the word--in whole animals.