Directed differentiation of human embryonic stem cells (hESCs) may yield models to study organogenesis, produce cells and tissues for therapies, and identify clinically relevant compounds for disease treatment. Optimal conditions for specific differentiation of hESCs are still being determined. Incorporation of fluorescent reporter genes will enable high-throughput screening to identify fate-specifying molecules. Ectopic expression, or silencing, of key developmental genes can also direct differentiation toward specific lineages. Here, we briefly overview various genetic modifications used to generate useful hESC lines. We identify strengths and limitations to each method and propose the most suitable approaches for different applications.