Synthetic biological tools that enable precise regulation of gene function within in vivo systems have enormous potential to discern gene function in diverse physiological settings. Here we report the development and characterization of a synthetic gene switch that, when targeted in the mouse germline, enables conditional inactivation, reports gene expression and allows inducible restoration of the targeted gene. Gene inactivation and reporter expression is achieved through Cre-mediated stable inversion of an integrated gene-trap reporter, whereas inducible gene restoration is afforded by Flp-dependent deletion of the inverted gene trap. We validate our approach by targeting the p53 and Rb genes and establishing cell line and in vivo cancer model systems, to study the impact of p53 or Rb inactivation and restoration. We term this allele system XTR, to denote each of the allelic states and the associated expression patterns of the targeted gene: eXpressed (XTR), Trapped (TR) and Restored (R).