To create a strategy for inducible gene targeting we developed a Cre-lox recombination system which responds to the synthetic steroid RU 486. Several fusions between Cre recombinase and the hormone binding domain (HBD) of a mutated human progesterone receptor, which binds RU 486 but not progesterone, were constructed. When tested in transient expression assays recombination activities of all fusion proteins were responsive to RU 486, but not to the endogenous steroid progesterone. However, the observed induction of recombination activity by the synthetic steroid varied between the different fusion proteins. The fusion with the highest activity in the presence of RU 486 combined with low background activity in the absence of the steroid was tested after stable expression in fibroblast and embryonal stem (ES) cells. We could demonstrate that its recombination activity was highly dependent on RU 486. Since the RU 486 doses required to activate recombination were considerably lower than doses displaying anti-progesterone effects in mice, this system could be used as a valuable tool for inducible gene targeting.