The purpose of this study was to generate human embryonic stem cell (hESC) lines harboring the green fluorescent protein (GFP) reporter at the endogenous loci of the Cone-Rod Homeobox (CRX) gene, a key transcription factor in retinal development. Zinc finger nucleases (ZFNs) designed to cleave in the 3′ UTR of CRX were transfected into hESCs along with a donor construct containing homology to the target region, eGFP reporter, and a puromycin selection cassette. Following selection, polymerase chain reaction (PCR) and sequencing analysis of antibiotic resistant clones indicated targeted integration of the reporter cassette at the 3′ of the CRX gene, generating a CRX-GFP fusion. Further analysis of a clone exhibiting homozygote integration of the GFP reporter was conducted suggesting genomic stability was preserved and no other copies of the targeting cassette were inserted elsewhere within the genome. This clone was selected for differentiation towards the retinal lineage. Immunocytochemistry of sections obtained from embryoid bodies and quantitative reverse transcriptase PCR of GFP positive and negative subpopulations purified by fluorescence activated cell sorting during the differentiation indicated a significant correlation between GFP and endogenous CRX expression. Furthermore, GFP expression was found in photoreceptor precursors emerging during hESC differentiation, but not in the retinal pigmented epithelium, retinal ganglion cells, or neurons of the developing inner nuclear layer. Together our data demonstrate the successful application of ZFN technology to generate CRX-GFP labeled hESC lines, which can be used to study and isolate photoreceptor precursors during hESC differentiation.