Our early study found that goat spermatozoa could spontaneously take up foreign DNA and vary in capabilities of spermatozoa from different donors to bind and internalize exogenous DNA. In this study, three goats with considerable differences of capability were used to investigate the effect of exogenous DNA on goat spermatozoa, and feasibility and efficiency of transgenic embryo production by sperm-mediated gene transfer method. The viability, acrosomal reaction frequencies and cleavages were decreased in the groups co-cultured with exogenous DNA, compared with the control groups, and the range of decrease was correlated with the capability of sperm cells up-take foreign DNA. After fertilizing with co-cultured spermatozoa, GFP gene was introduced into oocytes and expressed in early embryos. However, different efficiencies of transgenic embryos appeared in sperm donors (P<0.05). GFP gene was detected in 16.2% (25/154), 5.3% (4/76), and 0% (0/36) embryos, respectively, when high, middle and low capability of sperm donors were used. But only 6.5% (10/154) embryos from high capability sperm donor expressed GFP. Our results demonstrate that selecting high capability of sperm donor is a key step for improving efficiency of sperm mediated-gene transfer method. However, the adverse influence of foreign DNA on spermatozoa needs to be further studied.