A novel method to efficiently generate unmarked in-frame gene deletions in Rhodococcus equi was developed, exploiting the cytotoxic effect of 5-fluorocytosine (5-FC) by the action of cytosine deaminase (CD) and uracil phosphoribosyltransferase (UPRT) enzymes. The opportunistic, intracellular pathogen R. equi is resistant to high concentrations of 5-FC. Introduction of Escherichia coli genes encoding CD and UPRT conferred conditional lethality to R. equi cells incubated with 5-FC. To exemplify the use of the codA::upp cassette as counter-selectable marker, an unmarked in-frame gene deletion mutant of R. equi was constructed. The supA and supB genes, part of a putative cholesterol catabolic gene cluster, were efficiently deleted from the R. equi wild-type genome. Phenotypic analysis of the generated ΔsupAB mutant confirmed that supAB are essential for growth of R. equi on cholesterol. Macrophage survival assays revealed that the ΔsupAB mutant is able to survive and proliferate in macrophages comparable to wild type. Thus, cholesterol metabolism does not appear to be essential for macrophage survival of R. equi. The CD-UPRT based 5-FC counter-selection may become a useful asset in the generation of unmarked in-frame gene deletions in other actinobacteria as well, as actinobacteria generally appear to be 5-FC resistant and 5-FU sensitive.