The modification of an endogenous gene into a designed sequence by homologous recombination, termed gene targeting (GT), has broad implications for basic and applied research. Rice (Oryza sativa), with a sequenced genome of 389 Mb, is one of the most important crops and a model plant for cereals, and the single-copy gene Waxy on chromosome 6 has been modified with a frequency of 1% per surviving callus by GT using a strong positive-negative selection. Because the strategy is independent of gene-specific selection or screening, it is in principle applicable to any gene. However, a gene in the multigene family or a gene carrying repetitive sequences may preclude efficient homologous recombination-promoted GT due to the occurrence of ectopic recombination. Here, we describe an improved GT procedure whereby we obtained nine independent transformed calli having the alcohol dehydrogenase2 (Adh2) gene modified with a frequency of approximately 2% per surviving callus and subsequently isolated eight fertile transgenic plants without the concomitant occurrence of undesirable ectopic events, even though the rice genome carries four Adh genes, including a newly characterized Adh3 gene, and a copy of highly repetitive retroelements is present adjacent to the Adh2 gene. The results indicate that GT using a strong positive-negative selection can be widely applicable to functional genomics in rice and presumably in other higher plants.