The establishment of transgenesisi in axolotls is crucial for studying development and regeneration, as it would allow for long-term fate tracing as well as gene expression analysis, therefore we were interested in both obtaining animals expresing the transgene with little mosaicism in F0 generation and transgenesis. We demonstrate here that plasmid injection into one cell stage axolotl embryo generates transgenic animals that display germline transmission of a transgene. However, the efficiency of simple plasmid injection is very low, expression of the transgene is mosaic and seems to be promoter dependant. We have tested several methods of transgenesis developed in other systems. First we used Adeno-Associated Viral Terminal Repeats inserted into the injected construct to enhance the expression level of the transgene and reduce mosaicism. However, in the axolotl system we do not observe the enhancement of expression. Moreover, the expression appeared to be transient and disappeared after two months. Further, we tested the effect of the inclusion of ISceI meganuclease in the injections, succesful transgenesis method in the medaka system. It resulted in a higher percentage of F0 animals displaying strong , stable expression throughout the body. This represents the first demonstration in the axolotl of germline transmission of the transgene. Using this technique we have generated a germline transgenic anima expressing GFP ubiquitously in all tissue examined. We have used this anima to study cell fate in the dirsal fin during development. We have discovered a contribution of somite cells to dorsal fin mesenchyme in the axolotl, which was previously assumed to derive solely from neural crest. We have also studied the role of blood during tail regeneration by transplanting the ventral blood-forming region from GFP+ embryos into unlabeled host. During tail regeneration, we do not observe GFP+ cells contributing to muscle or nerve, suggesting that during tail regeneration blood stem cells do not undergo significant plasticity. We are interested in characterization of pluripotency of blastema cells. Previously, it has been shown that neural progenitor cells form the spinal cord can transdifferentiate to muscle and other tissue types in the regenerating tail. To test if blastema cells have the potency of differentiating into a neural tissue , we transplanted GFP+ 4day blastema into an injured spinal cord. Our result shows that blastema cells don't seem to contribute to the regenerating spinal cord.