Murine embryonic stem (ES) cells have become an indispensable tool for investigating genetic function both in vitro and, importantly, in vivo. Recent advances, including tetraploid aggregation, new site-specific recombinases and RNAi, have enabled more sophisticated manipulation of the ES cell genome. For instance, it is now possible to control gene expression in both a temporally and spatially restricted manner. Such new technologies are answering complex questions surrounding the function and interaction of an increasing number of genes. This chapter will review both the history and recent technological progress that has been made in mouse ES cell derivation, genetic manipulation and the generation of ES cell-derived chimaeric animals.