Mature spermatozoa spontaneously take up foreign DNA molecules which can be delivered to embryos at fertilization. Recently we discovered an endogenous reverse transcriptase (RT) activity in mouse spermatozoa which can reverse-transcribe exogenous RNA molecules into cDNA copies. Here we have sought to establish whether foreign RNA is a suitable substrate for the sperm RT to generate new functional genes. In vitro fertilization (IVF) experiments were carried out with spermatozoa that were preincubated with RNA from hybrid murine leukemia virus/virus-like 30S (MLV/VL30) beta-galactosidase (beta-gal) gene-containing vector. The RNA was taken up by sperm cells, reverse-transcribed, delivered to embryos upon IVF, and propagated in a mosaic pattern in founders and further in the F1 progeny. beta-gal protein expression was detected in several tissues from both F0 and F1 animals. These results indicate that spermatozoa can reverse-transcribe exogenous RNA so as to generate transcriptionally competent sequences that are transmitted to offspring upon fertilization.