What are transgenic mice and what do we learn from them? In this review, we focus on the generation of "classical" transgenic and "knock-out" mice. The establishment of transgenic and gene-targeted mice provides an unique tool to study the function(s) of a given gene in the context of a whole organism. Based on selected examples, we demonstrate the potential of this transgenic technology to understand the interactions between cells, organs and organ systems in genetically engineered mice.