Efficiency and specificity are key limiting factors for the production of transgenic animals. This review describes the recently developed animal gene transfer techniques, including non-site-specific methods of gene transfer into the testis and ovary for easy production of transgenic animals; gene targeting in embryonic stem cells, somatic cells and primordial germ cells for site-specific methods; methods to improve cloning efficiency in gene targeting; and site- and timing-specific gene targeting and controlled expression of transferred genes. In addition, methods of utilizing newly developed RNA interference, combined with the above techniques for controlling gene expression, to produce transgenic animals to spatio-temporally and reversibly knock down specific genes, are also discussed. The merits and disadvantages of each method are covered, as well as the potential use of these methods to develop transgenic animals for breeding new animal lines, to study disease models and to produce therapeutic medicines.