We have developed a strategy to generate mutant genes in mammalian cells in a conditional manner by employing a fusion protein, Cre-ER, consisting of the loxP site-specific Cre recombinase linked to the ligand-binding domain of the human estrogen receptor. We have established homozygous retinoid X receptor alpha-negative (RXR alpha-/-) F9 embryonal carcinoma cells constitutively expressing Cre-ER and have shown that estradiol or the estrogen agonist/antagonist 4-hydroxytamoxifen efficiently induced the recombinase activity, whereas no activity was detected in the absence of ligand or in the presence of the antiestrogen ICI 164,384. Furthermore, using a targeting vector containing a selection marker flanked by loxP sites, we have inactivated one retinoic acid receptor alpha allele in such a line, demonstrating that the presence of the recombinase does not inhibit homologous recombination. Combining this conditional site-specific recombination system with tissue-specific expression of Cre-ER may allow modification of the mammalian genome in vivo in a spatiotemporally regulated manner.