Rat embryonic stem (ES) cells offer the potential for sophisticated genome engineering in this valuable biomedical model species. However, germline transmission has been rare following conventional homologous recombination and clonal selection. Here we used the CRISPR/Cas9 system to target genomic mutations and insertions. We first evaluated utility for directed mutagenesis and recovered clones with biallelic deletions in Lef1. Mutant cells exhibited reduced sensitivity to glycogen synthase kinase 3 inhibition during self-renewal. We then generated a non-disruptive knock-in of DsRed at the Sox10 locus. Two clones produced germline chimaeras. Comparative expression of DsRed and Sox10 validated the fidelity of the reporter. To illustrate utility, oligodendrocyte lineage cells were visualised by live imaging of DsRed in neonatal brain slices and subjected to patch clamp recording. Overall these results show that CRISPR/Cas9 gene editing technology in germline competent rat ES cells is enabling for in vitro studies and for generating genetically modified rats.