The differentiation of pluripotent stem cells involves transition through a series of specific cell states. To understand these cell fate decisions, the field needs improved genetic tools for the labeling, lineage tracing and selection of specific cell types from heterogeneous differentiating populations, particularly in the human embryonic stem cell (hESC) system. We used zinc finger nuclease technology to stably insert a unique, selectable, floxed dual-fluorescence reporter transgene into the AAVS1 locus of RUES2 hESCs. This "stoplight" transgene, mTmG-2a-Puro, strongly expresses membrane-localized tdTomato red fluorescent protein until Cre-dependent recombination causes a switch to expression of membrane-localized enhanced green fluorescent protein (eGFP) and puromycin resistance. First, to validate this system in undifferentiated cells, we transduced transgenic hESCs with a lentiviral vector driving constitutive expression of Cre and observed the expected phenotypic switch. Next, to demonstrate its utility in lineage-specific selection, we transduced differentiated cultures with a lentiviral vector in which the striated muscle-specific CK7 promoter drives Cre expression. This yielded near-homogenous populations of eGFP(+) hESC-derived cardiomyocytes. The mTmg-2a-Puro hESC line described here represents a useful new tool for both in vitro fate mapping studies and the selection of useful differentiated cell types.