Following gene targeting, a loxP-neo-loxP cassette was introduced into ES cells. The presence of a selectable marker such as neo in the targeted allele may result in gene interference in flox mice or unexpected phenotypes due to genetic ambiguity in direct knockout mice. Typically, the neo cassette is selectively removed by transient expression of the Cre recombinase in targeted ES cell. However, this method involves a tedious process of selecting, expanding, and screening ES cell clones which may compromise germline competency. Here, we describe a novel method of combining adenovirus-Cre mediated gene recombination with ES gene targeting to facilitate efficient loxP-neo-loxP removal in ES cells. We demonstrate that adenovirus-Cre infected ES cells can retain their germline competency. The procedures described here facilitate a rapid genetic manipulation of ES cells to obtain neo-free knockout animals, multiple gene targeting, homozygous mutant ES cells ideal for in vitro characterization, or Rag-deficient blastocyst complementation. genesis 39:217–223, 2004. © 2004 Wiley-Liss, Inc.