Genetic engineering involves several key steps: 1) Isolating the desired gene, typically using restriction enzymes, 2) Inserting the gene into a vector like a plasmid for transfer, 3) Transforming the vector into a host organism like E. coli bacteria through processes like calcium chloride treatment, and 4) Identifying and isolating the transformed bacteria, usually using antibiotic resistance or phenotypic expression of the new gene. Common applications include producing insulin, growing human proteins in bacteria, and potentially modifying crops or curing genetic diseases.