Gene-targeting techniques are now frequently applied to embryonic stem (ES) cells to introduce mutations of endogenous genes in mice. Modifications introduced into tumor-suppressor genes by this technology have produced mice and cell lines with unique tumorigenic and growth characteristics, respectively. A number of strategies have been developed to enhance the efficiency of homologous recombination between targeting vectors and endogenous genes. This review describes recent advances in the techniques used to construct mice with a variety of genetic alterations. In addition, an application of gene-targeting is illustrated in the study of a class of genes with tumor-suppressor function. Recent findings from experiments using gene targeted mice to study the p53 tumor-suppressor gene are discussed and the potential of gene-targeting for the discovery and study of novel tumor-suppressor genes are explored.