Revolutionary new opportunities for the modification of milk composition have been created by the development of methods for gene transfer and targeted mutation of genes may extend the range of opportunities still further. Exploitation of these opportunities depends upon selection and cloning of milk protein genes and identification of the sequences that govern tissue-specific hormonally induced expression in the mammary gland. Fragments of the ovine beta-lactoglobulin gene fused to cDNA for the human therapeutic proteins clotting factor IX and alpha-1 antitrypsin have directed production of these proteins in the milk of transgenic mice and sheep. Factor IX was biologically active and co-migrated with authentic proteins, but was present at too low a concentration for commercial exploitation. Recent observations suggest that fusion genes containing genomic clones direct production of higher concentrations of protein. Mouse whey acidic protein genomic sequences also directed production of low concentrations of human tissue plasminogen activator in the milk of transgenic mice. Targeted expression of this kind may be used for the production of therapeutic and industrial proteins, to increase the concentration or modify the nature of milk proteins, reduce the concentration of lactose, change the composition of fat or direct production of bacteriocidal proteins in milk in order to combat mastitis.