We have developed methods to produce transgenic mice using yeast artificial chromosomes (YACs) and have applied these methods to the analysis of globin gene regulation using 248 kb beta-globin locus YACs (beta-YACs). The advantages of YAC transgenics are: 1) developmental regulation can be studied in the context of the whole locus, 2) mutations may be readily introduced into the YAC, and 3) the effect of these mutations on gene expression can be analyzed. Mice containing the wild-type beta-YAC show proper regulation of globin gene expression during development. Transgenics carrying a beta-YAC bearing a -117 A gamma mutation showed the anticipated phenotype of Greek HPFH, demonstrating that mutant beta-YACs can be used to generate mice that recreate human globin developmental mutants. Transgenic mice with YACs have also been used to examine the function of the LCR. Transgenic mice were generated with a beta-YAC containing a deletion of LCR DNAse I-hypersensitive site 3 (5'HS3). Our results suggest that: 1) the LCR contains functionally redundant elements, 2) the formation of a LCR complex does not require all of the HSs, 3) the individual HSs may modulate the interaction of the LCR with specific globin genes during development, and 4) that most of the HS activity is confined to the core region.