Gene targeting was used to introduce nonselectable genetic changes into chromosomal loci in mouse embryo-derived stem cells. The nonselectable markers were linked to a selectable marker in both insertion- and replacement-type vectors, and the transfer of the two elements to the Hprt locus was assayed. When insertion vectors were used as substrates, the frequency of transfer was highly dependent upon the distance between the nonselectable marker and the double-strand break in the vector. A marker located close to the vector ends was frequently lost, suggesting that a double-strand gap repair activity is involved in vector integration. When replacement vectors were used, cotransfer of a selectable marker and a nonselectable marker 3 kb apart was over 50%, suggesting that recombination between vector and target often occurs near the ends of the vector. To illustrate the use of replacement vectors to transfer specific mutations to the genome, we describe targeting of the delta F508 mutation to the CFTR gene in mouse embryo-derived stem cells.