Permanent and reversible genetic modifications are important approaches to study gene function in different cell types. They are also important for stem cell researchers to explore and test the therapeutic potential of stem cells. The piggyBac transposon from insects is a rising nonviral system that efficiently mutagenizes and mediates gene transfer into the mammalian genome. It is also characterized by its precise excision, leaving no trace sequence behind so that the genomic integrity of the mutated cell can be restored. Here, we use an optimized piggyBac transposon system to mediate gene transfer and expression of a bifunctional fluorescent reporter in human embryonic stem (ES) cells. We provide molecular evidence for transposase-mediated piggyBac integration events and functional evidence for successful expression of a transferred fluorescent protein genes in human ES cells and their in vitro differentiated derivatives. We also demonstrate that the integrated piggyBac transposon can be removed and an undisrupted insertion site can be restored, which implies potential applications for its use in gene therapy and genetics studies.