At present, genetically modified rats have not been generated from ES cells because stable ES cells and a suitable injection method are not available. To monitor the pluripotency of rat ES cells, we generated Oct4-Venus transgenic (Tg) rats via a conventional method, in which Venus is expressed by the Oct4 promoter/enhancer. This monitoring system enabled us to define a significant condition of culture to establish authentic rat ES cells based on a combination of 20% FBS and cell signaling inhibitors for Rho-associated kinase, mitogen-activated protein kinase, TGF-beta, and glycogen synthase kinase-3. The rat ES cells expressed ES cell markers such as Oct4, Nanog, Sox2, and Rex1 and retained a normal karyotype. Embryoid bodies and teratomas were also produced from the rat ES cells. All six ES cell lines derived from three different rat strains successfully achieved germline transmission, which strongly depended on the presence of the inhibitors during the injection process. Most importantly, high-quality Tg rats possessing a correct transgene expression pattern were successfully generated via the selection of gene-manipulated ES cell clones through germline transmission. Our rat ES cells should be sufficiently able to receive gene targeting as well as Tg manipulation, thus providing valuable animal models for the study of human diseases.