We describe a straightforward gene-targeting technique to achieve uniform, stable, and genetically invariant expression of a transgene in the vascular endothelium of mice. To demonstrate the feasibility of this approach, the reporter gene bacterial β-galactosidase was inserted via homologous recombination into the intronless thrombomodulin locus of murine embryonic stem cells. In this fashion, the lacZ gene is placed under the regulatory control of the endogenous thrombomodulin promoter. The expression of the transgene in adult mice recapitulated the widespread, stable, and high-level expression of the thrombomodulin gene in vascular endothelium. These data indicate that targeting of cDNAs into the thrombomodulin locus serves as a viable strategy to express transgenes in endothelial cells. Analysis of reporter gene expression revealed a heterogeneous pattern of thrombomodulin gene activity in the endothelium of the aorta and its tributaries. We also show that embryonic stem cells with a targeted thrombomodulin locus contribute in a mosaic fashion to the vascular endothelium of chimeric mice. This method for generating animals with a functionally heterogeneous cardiovascular system should provide an experimental technique for studying how localized genetic abnormalities in endothelial cell function lead to the development of vascular diseases.