The Müllerian ducts give rise to the female reproductive tract, including the Fallopian tubes, uterus, cervix, and anterior vagina. In male embryos, the Müllerian ducts regress, preventing the formation of female organs. We introduced the bacterial lacZ gene, encoding β-galactosidase (β-gal), into the AMHR-II locus (Amhr2) by gene targeting in mouse embryonic stem (ES) cells to mark Müllerian duct differentiation and regression. We show that Amhr2-lacZ heterozygotes express β-gal activity in an Amhr2-specific pattern. In the gonads, β-gal activity was detected in Sertoli cells of the testes from 2 weeks after birth, and fetal ovaries and granulosa cells of the adult ovary. β-gal activity was first detected in the rostral mesenchyme of the Müllerian ducts at 12.5 days post coitus (dpc) in both sexes but soon thereafter expression was found along the entire length of the Müllerian ducts with higher levels initially found in males. In females, β-gal activity was restricted to one side of the ductal mesoepithelium, whereas in males β-gal expression encircled the duct. β-gal activity was also detected in the coelomic epithelium at 13.5 and 14.5 dpc. In male embryos, mesenchymal β-gal activity permitted the visualization of the temporal and spatial pattern of Müllerian duct regression. This pattern was similar to that observed using a Müllerian duct mesoepithelium lacZ reporter, indicating a coordinated loss of Müllerian duct mesoepithelium and Amhr2-expressing mesenchyme. Mol. Reprod. Dev. 75: 1154–1162, 2008.© 2008 Wiley-Liss, Inc.