Transgenic mice carry cloned DNA fragments that have been introduced into the mouse genome, generally by microinjection into pronuclei. They can be used to determine the cis-acting DNA elements responsible for the tissue-specific expression of genes. For this purpose, transgenic mice were obtained carrying either the mouse albumin gene or the human insulin gene. In the first instance, it was shown that the regulatory sequences necessary for expression of the albumin gene transfected into differentiated hepatoma cells are not sufficient to induce its expression in transgenic mice. In contrast with the albumin gene, the short sequence upstream to the insulin gene necessary for its expression in transfected insulinoma cells is sufficient to allow expression in transgenic mice. Similar experiments were performed to study another crucial step in differentiation of lymphoid B cells, namely rearrangement of the immunoglobulin (Ig) genes. The chicken Ig lambda light chain gene in the germ line (unrearranged) form was introduced into the mouse genome, and the rearrangement observed in transgenic mouse lines is briefly described.