Gene targeting via homologous recombination in murine embryonic stem (ES) cells has been the method of choice for deciphering mammalian gene function in vivo. Despite improvements in this technology, it still remains a laborious method. Recent advances in RNA interference (RNAi) technology have provided a rapid loss-of-function method for assessing gene function in a number of organisms. Studies in mammalian cell lines have shown that introduction of small interfering RNA (siRNA) molecules mediates effective RNA silencing. Plasmid-based systems using RNA polymerase III (RNA pol III) promoters to drive short hairpin RNA (shRNA) molecules were established to stably produce siRNA. Here we report the generation of knockdown ES cell lines with transgenic shRNA. Because of the dominant nature of the knockdown, embryonic phenotypes could be directly assessed in embryos completely derived from ES cells by the tetraploid aggregation method. Such embryos, in which endogenous p120-Ras GTPase-activating protein (RasGAP), encoded by Rasa1 (also known as RasGAP), was silenced, had the same phenotype as did the previously reported Rasa1 null mutation.