We have examined the expression of transfected human hypoxanthine phosphoribosyltransferase minigenes (HPRT) in mouse embryonic stem (ES) cells. cDNA constructs of this gene that have been successfully used in somatic cell lines failed to confer hypoxanthine/aminopterin/thymidine (HAT) resistance in ES cells. In contrast, constructs containing introns 1 and 2 from the HPRT gene produced a high frequency of HAT-resistant colonies. This observation allowed us to identify two sequences in these introns that influence expression of the HPRT gene in ES cells. One element, located in intron 2, is required for effective HPRT expression in these cells; the other element, located in intron 1, acts as an enhancer of HPRT expression. Using this information, we have constructed an HPRT minigene that can be used for either positive or negative selection in ES cell experiments. This dual capability allows the design of "in-out" procedures to create subtle changes in target genes by homologous recombination with the aid of this selectable minigene.