The coexistence of humans and animals has existed for centuries. Over the past decade, animal research has played a critical role in drug development and discovery. More and more diverse animals, including transgenic animals, are used in basic research than in applied research. Transgenic animals are generated using molecular genetic techniques to add functional genes, alter gene products, delete genes, insert reporter genes into regulatory sequences, replace or repair genes, and make changes in gene expression. These genetically engineered animals are unique tools for studying a wide range of biomedical issues, allowing the exhibition of specific genetic alterations in various biological systems. Over the past two decades, transgenic animal models have played a critical role in improving our understanding of gene regulation and function in biological systems and human disease. This review article aims to highlight the role of transgenic animals in pharmacological, toxicological, and environmental research. The review accounts for various types of transgenic animals and their appropriateness in multiple types of studies.