Over the last 5000 years cereals have been bred for food, feed, and beverages by selection of spontaneous mutations and random hybrids. Since the turn of the century, crosses with defined parents, and since 1927 artificially induced mutations, have been used to create variability on which selection of new varieties is based. It is pointed out that hybrid corn and transfer of rust‐resistant genes from wild species into chromosomes of bread wheat was preceded by decades of basic research. Genetic transformation is an additional tool for the breeder to introduce novel genes in a rational manner and will complement but not replace the existing efficient breeding methods. Genetic transformation has been demonstrated in maize, rice, and wheat, while techniques to obtain transgenic barley plants are still being developed. Our present knowledge on the endosperm‐specific expression of storage proteins and the modulation of this expression by transcriptional activators is reviewed. Breeding strategies for altered protein quality and for proantho‐cyanidin‐free malting barley are presented. Engineering of an improved malt enzyme, a heat stable (1–3,1–4)‐β‐glucanase, is described. The enzyme is expected to survive, like α‐amylases, the kilning process and has been shown to act efficiently in the mashing process for the elimination of water‐soluble β‐glucans which impede filtration of wort. The engineered enzyme is expressed in transformed aleurone protoplasts and secreted from these cells and thus shown to be operational in the tissue, where it is expected to work. Hormone‐regulated promoters for the expression of genes acting during grain development and malting have been characterized. Prospects for the production of polyhydroxyalkanoates and cyclodextrins in cereal grains are discussed.