Tetraploid embryo complementation assay has shown that mouse ES cells alone are capable of supporting embryonic development and adult life of mice. Newly established F(1) hybrid ES cells allow the production of ES cell-derived animals at a high enough efficiency to directly make ES cell-based genetics feasible. Here we report the establishment and characterization of 12 new F(1) hybrid ES cell lines and the use of one of the best (G4) in a gain- and loss-of-function genetic study, where the in vivo phenotypes were assessed directly from ES cell-derived embryos. We found the generation of G4 ES cell-derived animals to be very efficient. Furthermore, even after two consecutive rounds of genetic modifications, the majority of transgenic lines retained the original potential of the parental lines; with 10-40% of chimeras producing ES cell-derived animals/embryos. Using these genetically altered ES cells, this success rate, in most cases, permitted the derivation of a sufficient number of mutants for initial phenotypic analyses only a few weeks after the establishment of the cell lines. Although the experimental design has to take into account a moderate level of uncontrolled damage on ES cell lines, our proof-of-principle experiment provides useful data to assist future designs harnessing the power of this technology to accelerate our understanding of gene function.