Conditional knockout is a powerful research tool for specific deletion of target genes, especially for the genes that are widely expressed and developmentally regulated. The development of the retina involves multiple intrinsic and extrinsic factors, many are required for embryonic development or expressed in multiple tissue or cell types. To study their roles in a spatial- or temporal-specific fashion, Cre/loxP-based gene-targeting approach has been utilized successfully. This chapter describes the methodology of conditional knockout approach in studying the development of the retina, using LIM homeobox gene Isl1 as an example. It provides details on targeting vector design and construction, introducing the vector into embryonic stem (ES) cell, screening ES cell for the recombination events, injecting ES cells, and generating chimeric and null mice. It also discusses the current issues in the use of Cre/loxP-based gene-targeting approach.