Human embryonic stem (hES) cells are renewable cell sources that have potential applications in regenerative medicine. The development of technologies to produce permanent and site-specific genome modifications is in demand to achieve future medical implementation of hES cells. We show that a baculoviral vector (BV) system carrying zinc finger nucleases (ZFNs) can successfully modify the hES cell genome. BV-mediated transient expression of ZFNs specifically disrupted the CCR5 locus in transduced cells and the modified cells exhibited resistance to HIV-1 transduction. To convert the BV to a gene targeting vector, a DNA donor template and ZFNs were incorporated into the vector. These hybrid vectors yielded permanent site-specific gene addition in both immortalized human cell lines (10%) and hES cells (5%). Modified hES cells were both karyotypically normal and were pluripotent. These results suggest that this baculoviral delivery system can be engineered for site-specific genetic manipulation in hES cells. We have also validated the mRNA display technology for designing new ZFNs for targeting transcriptional factors involved in controlling hES cell self-renewal and differentiation.