The Cre/loxP site-specific recombination system derived from bacteriophage P1 provides a convenient tool for directed modifications of genomes in various organisms. To exploit Cre-mediated manipulation of mouse genomic sequences at the zygote stage, we have developed a transgenic mouse line carrying the CAG-cre transgene in which the cre gene is under control of the cytomegalovirus immediate early enhancer-chicken beta-actin hybrid (CAG) promoter. The activity of the Cre recombinase at early stages of development was examined by crossing the CAG-cre transgenic mice to another transgenic mouse line carrying a reporter gene construct, CAG-CAT-Z, which directs expression of the E. coli lacZ gene upon Cre-mediated excision of the loxP-flanked chloramphenicol acetyltransferase (CAT) gene located between the CAG promoter and the lacZ gene. PCR-based analysis of F1 progeny from CAG-cre males x CAG-CAT-Z females showed that transmission of the CAG-cre transgene was accompanied by the complete deletion of the CAT gene of the CAG-CAT-Z transgene in all tissues, and that this deletion was never observed in the progeny without transmission of the CAG-cre gene. On the other hand, analysis of F1 mice from CAG-CAT-Z males x CAG-cre females showed that the CAG-CAT-Z transgene had undergone complete deletion of the CAT gene in all tissues irrespective of the cotransmission of the CAG-cre gene. This Cre-mediated recombination in F1 mice occurred before the two-cell stage of embryonic development, as shown by X-gal staining. The results suggest that the CAG-cre transgene is expressed in developing oocytes of CAG-cre transgenic mice, and Cre mRNA and/or protein are retained in mature oocytes irrespective of the transmission of the CAG-cre transgene, resulting in efficient Cre-mediated recombination of paternally derived target genes upon fertilization. The CAG-cre transgenic mouse should serve as a useful tool to introduce prescribed genetic modifications into the mouse embryo at the zygote stage.