Our objective was to address current cell source limitations in engineering pancreatic â-cells for the treatment of type 1 diabetes by investigating retroviral genetic modification of murine embryonic stem cells (mESC) with a murine stem cell virus (MSCV) encoding proendocrine transcription factor Neurogenin 3 (Ngn3). We found that expression of Ngn3 and the enhanced green fluorescent protein (eGFP) reporter gene were both significantly silenced in genetically modified mESCs. To overcome this obstacle and enhance the efficiency of retroviral gene transfer to mESCs in general, we employed a virus-polymer complexation method to deliver more transgenes to mESCs. Despite increased transgene delivery and integration in mESCs, transgene expression did not increase. Results suggest mESCs may be restricted in several steps of retrovirus transduction. We then investigated which steps of the virus lifecycle restrict efficient transduction of mESCs by using a recombinant MMuLV-derived retrovirus and a recombinant HIV-1-derived lentivirus to compare three major steps in the transduction of mESCs and NIH 3T3 cells - virus binding, virus integration, and transgene expression. We found that retroviruses and lentiviruses similarly bind 3 or 4-fold less efficiently to R1 mES cells than to NIH 3T3 fibroblasts. We also detected 3-fold fewer integrated retrovirus transgenes and 11-fold lower expression levels in NIH 3T3 cells, suggesting the primary limitation to retrovirus transduction may be low levels of transgene expression. In contrast we detected 10-fold fewer integrated lentivirus transgenes and 8-fold lower expression levels, suggesting lentivirus transduction may be limited by inefficient intracellular post-binding steps of transduction. We then investigated whether depletion of linker histone 1 in mESCs would alleviate silencing of retrovirus transgenes and improve gene transfer by transducing histone H1c, H1d, H1e triple null mESCs with different recombinant vectors. We found this did not improve viral gene transfer. This research is significant for improving protocols for gene transfer to ES cells and facilitating the use of modified ES cells in regenerative medicine.