We have generated a transgenic line that expresses the Cre gene product under the regulation of a 12.5 kb upstream regulatory sequence from the Sox2 gene. Using a R26R reporter line, we show that this transgenic line induces recombination in all epiblast cells by embryonic day (E) 6.5 but little or no activity in other extraembryonic cell types at this time. When crossed to a conditional allele of the Sonic hedgehog gene (Shhc), all Sox2Cre;Shhn/Shhc embryos displayed a phenotype indistinguishable from that of the Shh null mutant. Sox2Cre functioned more efficiently in epiblast-mediated recombination than the Mox2Cre (MORE) transgenic line, which has also been shown to drive Cre-mediated recombination exclusively in the embryonic component of the early mouse embryo. Although most MORE; shhh/shhc embryos have a shh hull phenotype, 33% displayed a milder skeletal phenotype, most likely result of incomplete recombination at egg cylinder stages. In agreement with these findings, Sox2Cre was active earlier and Sox2Cre-mediated recombination was more advanced than MORE-mediated recombination at early gastrulation stages. The Sox2Cre line is likely to be more effective in generating complete, epiblast-specific removal of gene activity, and the mosaic activity of the MORE line will be helpful in generating partial loss-of-function phenotypes in the embryo-proper.