BACKGROUND: Although the rat is extensively used as a laboratory model, the inability to utilize germ line-competent rat embryonic stem (ES) cells has been a major drawback for studies that aim to elucidate gene functions. Recently, zinc-finger nucleases (ZFNs) were successfully used to create genome-specific double-stranded breaks and thereby induce targeted gene mutations in a wide variety of organisms including plants, drosophila, zebrafish, etc. METHODOLOGY/PRINCIPAL FINDINGS: We report here on ZFN-induced gene targeting of the rat interleukin 2 receptor gamma (Il2rg) locus, where orthologous human and mouse mutations cause X-linked severe combined immune deficiency (X-SCID). Co-injection of mRNAs encoding custom-designed ZFNs into the pronucleus of fertilized oocytes yielded genetically modified offspring at rates greater than 20%, which possessed a wide variety of deletion/insertion mutations. ZFN-modified founders faithfully transmitted their genetic changes to the next generation along with the severe combined immune deficiency phenotype. CONCLUSIONS AND SIGNIFICANCE: The efficient and rapid generation of gene knockout rats shows that using ZFN technology is a new strategy for creating gene-targeted rat models of human diseases. In addition, the X-SCID rats that were established in this study will be valuable in vivo tools for evaluating drug treatment or gene therapy as well as model systems for examining the treatment of xenotransplanted malignancies.