Homologous recombination has been used to introduce site-specific mutations into murine embryonic stem (ES) cells with both insertion and replacement vectors. In this study, we compared the frequency of gene targeting with various lengths of homology and found a dramatic increase in targeting with an increase in homology from 1.3 to 6.8 kb. We examined in detail the relationship between the length of homology and the gene-targeting frequency for replacement vectors and found that a critical length of homology is needed for targeting. Adding greater lengths of homology to this critical length has less of an effect on the targeting frequency. We also analyzed the lengths of homology necessary on both arms of the vector for gene replacement events and found that 472 bp of homology is used as efficiently as 1.2 kb in the formation and resolution of crossover junctions.