The specificity of gene expression in embryonic stem (ES) cells was analyzed both under in vitro culture conditions and during early embryogenesis. ES cells were infected with U3 beta geo, a U3 gene trap retrovirus that contains coding sequences for a beta-galactosidase-neomycin phosphotransferase hybrid protein. Integrated proviruses, which disrupted expressed cellular genes, were selected in the presence of G418. ES clones expressing regulated beta geo fusion genes were identified by changes in 5-bromo-4-chloro-3-indolyl-beta-D-galactopyranoside staining after in vitro differentiation. Thirty-one of 191 clones tested (16%) exhibited regulated expression of beta geo protein. Seven genes disrupted by U3 beta geo were passed into the germline, and expression of the beta geo fusion genes was analyzed in vivo, including inserts disrupting the Eck and REX-1 genes. In each case, genes trapped in cultured ES cells were expressed in the inner cell mass of preimplantation embryos, and changes in lacZ expression during in vitro differentiation were also observed during early development. Thus, cultured ES cells maintain, to a considerable extent, the transcriptional specificity of the pluripotent cells of the preimplantation embryo. As a consequence, in vitro screens utilizing gene traps provide a rapid and accurate means to identify and disrupt developmentally regulated genes.