We have generated an embryonic stem (ES) cell line in which sequences encoding green fluorescent protein (GFP) were targeted to the locus of the pancreatic-duodenal homeobox gene (Pdx1). Analysis of chimeric embryos derived from blastocyst injection of Pdx1(GFP/w) ES cells demonstrated that the pattern of GFP expression was consistent with that reported for the endogenous Pdx1 gene. By monitoring GFP expression during the course of ES cell differentiation, we have shown that retinoic acid (RA) can regulate the commitment of ES cells to form Pdx1(+) pancreatic endoderm. RA was most effective at inducing Pdx1 expression when added to cultures at day 4 of ES differentiation, a period corresponding to the end of gastrulation in the embryo. RT-PCR analysis showed that Pdx1-positive cells from day 8 cultures expressed the early endoderm markers Ptf1a, Foxa2, Hnf4alpha, Hnf1beta, and Hnf6, consistent with the notion that they corresponded to the early pancreatic endoderm present in the embryonic day 9.5 mouse embryo. These results demonstrate the utility of Pdx1(GFP/w) ES cells as a tool for monitoring the effects of factors that influence pancreatic differentiation from ES cells.