An efficient animal cloning technology, using the procedure of nuclear transfer (NT), coupled with the genetic modification of cultured cells, would provide many new opportunities for livestock agriculture. It is still remarkable that NT using differentiated donor cells can produce physiologically normal animals, but the process is inefficient and highly prone to epigenetic errors. Aberrant patterns of gene expression in clones contribute to the cumulative losses and abnormal phenotypes observed throughout development. This raises animal welfare concerns that currently limit the acceptability and applicability of the technology. Importantly, it appears that these clone-associated phenotypes are not transmitted to offspring following sexual reproduction. It is expected that methods which improve the reprogramming of the donor genome following NT will increase cloning efficiencies to realise the full potential of this reproductive technology. Efficient cloning potentially enables rapid dissemination of elite genotypes from nucleus herds to commercial producers. Initial applications will, however, focus on producing small numbers of high value animals for natural breeding, especially clones of progeny-tested sires. The continual advances in animal genomics towards the identification of genes that influence livestock production traits and human health increase the ability to genetically modify animals to enhance efficiency and produce superior quality food and biomedical products for niche markets. The potential opportunities for animal agriculture are more challenging though, because of the greater demands on cost, efficiency, consumer acceptance and relative value of the product in contrast to biomedicine, which has been the main driver for this technology platform. Nevertheless, cloning and transgenesis are being used together to increase the genetic merit of livestock; however, the integration of this technology into practical farming systems remains some distance in the future.