The RAG-1 and RAG-2 genes synergistically confer VDJ recombinase activity to nonlymphoid cell lines. To unequivocally test RAG gene function, we created lines of mice that lack functional copies of these genes. Consistent with the possibility that RAG gene encode the tissue-specific components of VDJ recombinase, RAG-2-deficient mice are viable but have a severe combined immune deficiency due to inability to initiate VDJ recombination and thereby generate mature lymphocytes. RAG-2-deficient mice have no obvious defect in any tissue or lineage other than lymphocytes, indicating that VDJ recombinase activity and RAG-2-gene function is required only for lymphocyte development. Levels of RAG-1 and RAG-2 expression in primary murine lymphoid tissues and lymphoid bone marrow cultures generally are much higher than those of transformed precursor B-cell lines. Low-level RAG gene expression in permanent cell lines results from a decline during propagation due to outgrowth of cells with lower RAG expression levels. The low and variable level of RAG gene expression in transformed pre-B cell lines correlates with low and variable rates of endogenous VDJ recombination; therefore, such lines are not reliable models for experiments aimed at studying mechanisms that target this activity to particular variable region gene segments. To generate such a system, we introduced RAG genes into B-lineage lines under the control of a heat shock-inducible promoter; heat-shock treatment induces extremely high-level but transient RAG expression accompanied by parallel induction of VDJ recombinase activity. Such cells efficiently rearrange transfected VDJ recombination substrates in a regulated manner that is dependent on the activity of transcriptional control elements associated with the target V gene segments.