The use of homologous recombination to modify genes in embryonic stem (ES) cells provides a powerful means to elucidate gene function and create disease models. Application of this technology to engineer genes in rats has not previously been possible because of the absence of germline-competent ES cells in this species. We have recently established authentic rat ES cells. Here we report the generation of gene knockout rats using the ES-cell-based gene targeting technology. We designed a targeting vector to disrupt the tumour suppressor gene p53 (also known as Tp53) in rat ES cells by means of homologous recombination. p53 gene-targeted rat ES cells can be routinely generated. Furthermore, the p53 gene-targeted mutation in the rat ES-cell genome can transmit through the germ line via ES-cell rat chimaeras to create p53 gene knockout rats. The rat is the most widely used animal model in biological research. The establishment of gene targeting technology in rat ES cells, in combination with advances in genomics and the vast amount of research data on physiology and pharmacology in this species, now provide a powerful new platform for the study of human disease.