Gene modifications in animal models have been greatly facilitated through the application of targeted genome editing tools. The prokaryotic CRISPR/Cas9 type II genome editing system has recently been applied in cell lines and vertebrates. However, we still have very limited information about the efficiency of mutagenesis, germline transmission rates and off-target effects in genomes of model organisms. We now demonstrate that CRISPR/Cas9 mutagenesis in zebrafish is highly efficient, reaching up to 86.0%, and is heritable. The efficiency of the CRISPR/Cas9 system further facilitated the targeted knock-in of a protein tag provided by a donor oligonucleotide with knock-in efficiencies of 3.5-15.6%. Mutation rates at potential off-target sites are only 1.1-2.5%, demonstrating the specificity of the CRISPR/Cas9 system. The ease and efficiency of the CRISPR/Cas9 system with limited off-target effects make it a powerful genome engineering tool for in vivo studies.