Analysis of how external proliferation signals impinge on the regulation of the cell cycle is ideally performed in cells that are capable of normal physiological withdrawal into the quiescent (G0) phase of the cell cycle as well as resumption of growth following appropriate stimuli. Targeted homologous recombination (gene targeting) provides an important new approach to determine the function of specific genes in these cellular processes. Current gene targeting methodology necessitates the use of immortal and stably diploid cell lines. This report investigates several rodent cell lines, by both genetic and physiological criteria, for use in gene targeting studies of the G0 to G1 transition. All murine cell lines examined were aneuploid. Some rat cell lines were euploid by chromosome number, but three specific genes, c-myc, c-raf-1 and Rb, were not always diploid. Only one cell line, an early-passage subclone of the Rat-1 cell line, was diploid for c-myc, c-raf-1 and Rb. An hprt- derivative of this cell line was isolated (designated TGR-1) and its karyotype was established by G-banding. TGR-1 cells were shown to withdraw into G0 upon serum starvation and to uniformly enter S phase after refeeding. Expression patterns of the c-myc, c-raf-1 and Rb genes and several properties of the gene products were found to be normal. The frequency of targeted homologous recombination of the c-myc and c-raf-1 loci was found to be within values observed with other cell lines. Thus, by both genetic and physiological criteria the TGR-1 cell line is a good model system for the analysis of the roles of c-myc, c-raf-1 and Rb in signal transduction, and will probably prove useful in studies involving other genes.