In this report we describe the development of a sensitive assay for gene expression in zebrafish embryos using beta-lactamase as a reporter gene. We show that injection of a green fluorescent substrate for beta-lactamase allows the detection of reporter gene expression in live embryos. The beta-lactamase enzyme catalyzes the hydrolysis of the substrate, thereby disrupting fluorescence resonance energy transfer from the donor to the acceptor dye in the molecule. As a result, a blue fluorescent product is produced and retained specifically in cells within which the enzyme is expressed. beta-Lactamase is therefore suitable for monitoring spatially restricted patterns of gene expression in the early embryo. We suggest that this new reporter system provides a major advancement in sensitivity over the existing methods for monitoring gene expression in vivo during early embryogenesis.