Custom-designed nucleases afford a powerful reverse genetic tool for direct gene disruption and genome modification in vivo. Among various applications of the nucleases, homologous recombination (HR)-mediated genome editing is particularly useful for inserting heterologous DNA fragments, such as GFP, into a specific genomic locus in a sequence-specific fashion. However, precise HR-mediated genome editing is still technically challenging in zebrafish. Here, we establish a GFP reporter system for measuring the frequency of HR events in live zebrafish embryos. By co-injecting a TALE nuclease and GFP reporter targeting constructs with homology arms of different size, we defined the length of homology arms that increases the recombination efficiency. In addition, we found that the configuration of the targeting construct can be a crucial parameter in determining the efficiency of HR-mediated genome engineering. Implementing these modifications improved the efficiency of zebrafish knock-in generation, with over 10% of the injected F0 animals transmitting gene-targeting events through their germline. We generated two HR-mediated insertion alleles of sox2 and gfap loci that express either superfolder GFP (sfGFP) or tandem dimeric Tomato (tdTomato) in a spatiotemporal pattern that mirrors the endogenous loci. This efficient strategy provides new opportunities not only to monitor expression of endogenous genes and proteins and follow specific cell types in vivo, but it also paves the way for other sophisticated genetic manipulations of the zebrafish genome.