Insertion of a transgene into a defined genomic locus in human embryonic stem cells (hESCs) is crucial in preventing random integration-induced insertional mutagenesis, and can possibly enable persistent transgene expression during hESC expansion and in their differentiated progenies. Here, we employed homologous recombination in hESCs to introduce heterospecific loxP sites into the AAVS1 locus, a site with an open chromatin structure that allows averting transgene silencing phenomena. We then performed Cre recombinase mediated cassette exchange using baculoviral vectors to insert a transgene into the modified AAVS1 locus. Targeting efficiency in the master hESC line with the loxP-docking sites was up to 100%. Expression of the inserted transgene lasted for at least 20 passages during hESC expansion and was retained in differentiated cells derived from the genetically modified hESCs. Thus, this study demonstrates the feasibility of genetic manipulation at the AAVS1 locus with homologous recombination and using viral transduction in hESCs to facilitate recombinase-mediated cassette exchange. The method developed will be useful for repeated gene targeting at a defined locus of the hESC genome.