Abstract. Insulin‐like growth factor‐1 (IGF‐1) is an essential growth factor for normal intrauterine development and postnatal growth. Mice with a complete deficiency of IGF‐1 (IGF‐1–null mice), created by homologous recombination, were found to exhibit postnatal lethality, growth retardation, infertility, and profound defects in the development of major organ systems. Furthermore, IGF‐1–null mice were resistant to growth hormone (GH) treatment in peri‐pubertal somatic growth. Using the Cre/loxP‐induced conditional knockout system, we generated a mouse that lacks IGF‐1 specifically in the liver, the primary site of IGF‐1 production. Interestingly, although circulating and serum levels of IGF‐1 were decreased by ≈ 75% in these mice, they exhibited no defect in growth or development. When administered exogenously, GH stimulated IGF‐1 production in several extra‐hepatic tissues as well as body growth. The “Somatomedin hypothesis” originally proposed that circulating IGF‐1 acting in various tissues mediate the effects of GH. These striking in vivo results, obtained using homologous recombination technology, call for a major modification of the Somatomedin hypothesis. These gene targeting studies confirm that IGF‐1 is essential for GH‐stimulated postnatal body growth. However, liver‐derived (endocrine) IGF‐1 is not essential for normal postnatal growth, though it does exert a negative feedback on GH secretion. Instead, local production of IGF‐1, acting in a paracrine/autocrine fashion, appears to mediate GH‐induced somatic growth. This review will discuss the effects of tissue‐specific IGF‐1 gene deficiency created by the Cre/loxP system versus the conventional IGF‐1 knockout.