The mouse alpha-lactalbumin gene has been replaced with the human gene by two consecutive rounds of gene targeting in hypoxanthine phosphoribosyltransferase (HPRT)-deficient feeder-independent murine embryonic stem (ES) cells. One mouse alpha-lactalbumin allele was first replaced by an HPRT minigene which was in turn replaced by human alpha-lactalbumin. The end result is a clean exchange of defined DNA fragments with no other DNA remaining at the target locus. Targeted ES cells at each stage remained capable of contributing efficiently to the germ line of chimeric animals. Double replacement using HPRT-deficient ES cells and the HPRT selection system is therefore a powerful and flexible method of targeting specific alterations to animal genes. A typical strategy for future use would be to generate a null mutation which could then be used to produce multiple second-step alterations at the same locus.