The use of bacterial artificial chromosomes (BACs) provides a consistent and high targeting efficiency of homologous recombination in embryonic stem (ES) cells, facilitated by long stretches of sequence homology. Here, we introduce a BAC targeting method which employs restriction fragment length polymorphisms (RFLPs) in targeted polymorphic C57BL/6/Cast/Ei F1 mouse ES cell lines to identify properly targeted ES cell clones. We demonstrate that knockout alleles can be generated either by targeting of an RFLP located in the open reading frame thereby disrupting the RFLP and ablating gene function, or by introduction of a transcription stop cassette that prematurely stops transcription of an RFLP located downstream of the stop cassette. With both methods we have generated Rnf12 heterozygous knockout ES cells, which were identified by allele specific PCR using genomic DNA or cDNA as a template. Our results indicate that this novel strategy is efficient and precise, by combining a high targeting efficiency with a convenient PCR based readout and reliable detection of correct targeting events.