Genetically modified animals represent a resource of immense potential for cancer research. Classically, genetic modifications in mice were obtained through selected breeding experiments or treatments with powerful carcinogens capable of inducing random mutagenesis. A new era began in the early 1980s when genetic modifications by inserting foreign DNA genes into the cells of an animal allowed for the development of transgenic mice. Since that moment, genetic modifications have been able to be made in a predetermined way. Gene targeting emerged later as a method of in vivo mutagenesis whereby the sequence of a predetermined gene is selectively modified within an intact cell. In this review we focus on how genetically modified mice can be created to study tumour development, and how these models have contributed to an understanding of the genetic alterations involved in human cancer. We also discuss the strengths and weaknesses of the different mouse models for identifying cancer genes, and understanding the consequences of their alterations in order to obtain the maximum benefit for cancer patients.