A cell based system for the production of transgenic animals would offer significant advantages, allowing in vitro analysis of transgenes before the production of whole animals, precise placement of transgenes and the possibility of deletion, replacement or mutation of endogenous genes. In mice embryonic stem cells provide a tool for such precise genetic manipulation. However, despite considerable efforts, neither ES nor EG cells capable of contributing to the germline of any livestock species have been isolated. This dissertation describes cell mediated transgenesis by in vitro transfection of cultured cells followed by nuclear transfer. Several different cell cultures were assessed for their suitability for nuclear transfer. Viable lambs were obtained from embryonic, fetal and adult somatic cells. This demonstrated for the first time that cellular totipotency is not irreversibly lost during differentiation. Some but not all of these cell types could support cell mediated transgenesis. A genomic Factor IX construct designed to express in the lactating mammary gland has been generated and used to demonstrate nuclear transfer as a means of transgenesis. Viable Factor IX transgenic female lambs were derived, and shown to express high concentration of the recombinant protein in their milk. These now provide the prospect of recombinant Factor IX as a safe alternative to human serum derived protein for the treatment of Haemophilia B. Also reported are preliminary experiments to assess gene targeting in farm animals. An ovine HPRT targeting vector was constructed. Inactivation of the ovine HPRT locus was attempted using fibroblast cells capable of supporting development after nuclear transfer.