Bacterial artificial chromosome (BAC) recombineering is a novel technique for DNA manipulation. It starts from an original chromosomal gene locus that is modified to introduce a transgene under the expression control of the original gene locus. In most cases a cell type specific promoter is chosen and the transgene is placed in a way that the exon containing the start codon is replaced. Alternatively, BACs such as the Rosa26 BAC are chosen because of their known open chromatin and ubiquitous promoter activity that allows a broad expression profile of the transgene in the whole body. Thus, transgenes can be overexpressed within their natural transcriptional regulatory circuit. BAC transgenes have a high tendency to maintain their appropriate chromatin status because the endogenous locus was expressed in different cell types. Here, we give a detailed protocol based on the original idea to choose a BAC approach until the injection of the modified BAC DNA that leads to the generation of novel transgenic mouse lines. As an example for a BAC mouse model suitable for the analysis of stem cell or hematopoietic stem cell functions, we chose modification of the locus for the transcription factor Stat3. Stat3 variants replace the wild-type Stat3 gene to study their function in particular in the earliest cell types of the body.