A reporter gene can be used to differentiate transformed cells by tracking down the activity of its co-responding genes (receptor gene). It can be used to monitor the transformation of host cells by foreign DNA. They act as a selectable marker to determine whether the host cell has taken up the foreign DNA or the foreign gene gets expressed in the cell.

The researchers place the reporter gene and the foreign gene in the same DNA construct. Then, this combined DNA construct is inserted in the cell. Here, the reporter gene is used as a selectable marker to find out the successful uptake of genes of interest (foreign genes). An example of reporter genes includes the lac Z gene, which encodes a green fluorescent protein in a jellyfish. The others, which appear blue in color, indicate that cells do not carry foreign DNA.