The introduction of small mutations instead of null alleles into the mouse genome has broad applications to the study of protein structure-function relationships and the creation of animal models of human genetic diseases. To test a simple mutational strategy we designed a targeting vector for the mouse proopiomelanocortin (POMC) gene containing a single nucleotide insertion that converts the initial tyrosine codon of beta-endorphin 1-31 to a premature translational termination codon and introduces a unique Hpal endonuclease restriction site. The targeting vector also contains a neo cassette immediately 3' to the last POMC exon and a herpes simplex virus thymidine kinase cassette to allow positive and negative selection. Homologous recombination occurred at a frequency of 1/30 clones of electroporated embryonic stem cells selected in G418 and gancyclovir. 10/11 clones identified initially by a polymerase chain reaction (PCR) strategy had the predicted structure without evidence of concatemer formation by Southern blot analysis. We used a combination of Hpa I digestion of PCR amplified fragments and direct nucleotide sequencing to further confirm that the point mutation was retained in 9/10 clones. The POMC gene was transcriptionally silent in embryonic stem cells and the targeted allele was not activated by the downstream phosphoglycerate kinase-1 promoter that transcribed the neo gene. Under the electroporation conditions used, we have demonstrated that a point mutation can be introduced with high efficiency and precision into the POMC gene using a replacement type vector containing a retained selectable marker without affecting expression of the allele in the embryonic stem cells. A similar strategy may be useful for a wide range of genes.