Gene targeting by homologous recombination in pluripotent embryonic stem cells enabled the systematic creation of mouse strains with defined genetic alterations. During the past few years a rapidly growing number of gene targeted mice has provided new insights into development, selection, activation, and signaling of T and B cells, as well as into the functions of cytokines. Here we discuss the present state of targeting technology and summarize the phenotypic changes observed in gene targeted mouse strains of immunological interest. These data allow us for the first time to define genetic checkpoints in lymphocyte development that are crucial for the orderly progression of T and B cells through ontogeny and for the generation of an immune response.