This paper discusses the use of genetic engineering applications in animal breeding, including a description of the methods, their potential and current uses and ethical issues. Genetic engineering is the name of a group of techniques used to identify, replicate, modify and transfer the genetic material of cells, tissues or complete organisms. Important applications of genetic engineering in animal breeding are: 1) Marker-assisted selection (MAS). The objective of this technology is to increase disease resistance, productivity and product quality in economically important animals by adding information of DNA markers to phenotypes and genealogies for selection decisions. 2) Transgenesis, the direct transfer of specific genes/alleles between individuals, species, or even Kingdoms, in order to change their phenotypic expression in the recipients. Compared to the 'traditional' improvement techniques based on phenotypic information only, these gene-by-gene techniques allow theoretically a more complete management of animal genomes for animal breeding. In spite of high expectations and new technical developments, its actual efficiency is not always high, as they require a thorough knowledge of functional genomics, and pose additional technical, economical and ethical problems. The possible role for cloning adult animals in breeding is also discussed.