Generation of transgenic animal models and production of useful genetically engineered mammalian cell lines is highly dependent on endogenous DNA recombination mechanisms (either homologous recombination or illegitimate recombination) for stable incorporation of exogenous DNA into the genome. An alternative and complementary recombination methodology based on the prokaryotic site-specific recombinase Cre from phage PI. Expression of Cre recombinase in mammalian cells catalyzes DNA recombination between specific 34 bp loxP sites that were previously engineered into the genome by standard gene transfer methodologies. Because these sites do not exist naturally in the mouse genome, recombination occurs specifically at the sites placed into the genome. By simply choosing how and where such sites are placed on the DNA, Cre recombinase can specifically and precisely delete a preselected DNA segment from the genome. Moreover, because Cre also catalyzes intermolecular recombination, exogenous DNA containing a loxP site can be precisely targeted for integration at a loxP site previously placed into the genome, thus allowing the facile production of isogenic genetically engineered cell lines. This methodology has now been used to remove unwanted DNA (such as selectable markers) from the genomes of yeast and transgenic mice. Moreover, this recombination system was exploited to design a binary transgenic mouse scheme that allows the controlled expression of potentially toxic genes or that can be used to generate a somatic knockout mutation. Combining this binary recombination system with one of the numerous inducible gene expression systems has the potential of allowing the generation of a somatic knockout in a transgenic animal by the simple administration of a chemical compound.