Transgenic animals are organisms that have had their DNA altered to include genes from other species. This genetic modification allows scientists to study gene function and develop new treatments for diseases. Common examples include mice engineered to model human diseases and goats that produce proteins for medical use in their milk. These animals are created using techniques like gene cloning and microinjection, where desired genes are inserted into the animal's genome. Transgenic animals can provide valuable insights into genetics, improve agricultural practices, and contribute to advancements in biotechnology and medicine.