Methods and compositions for transforming cells, resulting in efficient and stable site-specific integration of transgenes, are disclosed. Transformation is achieved by introducing into a cell an acceptor vector, preferably a retroviral vector, which integrates into the genome of the cell. The acceptor vector comprises two incompatible lox sequences, L1 and L2. A donor vector is then introduced into the cell comprising a transgene flanked by the same L1 and L2 sequences. Stable gene transfer is initiated by contacting the lox L1 and L2 sequences with Cre recombinase.