Molecular biological advances have allowed the use of gene therapy in a clinical setting. In addition, numerous reports have indicated the existence of inducible osteoprogenitor cells in skeletal muscle. Because of this, we hypothesized that skeletal muscle cells might be ideal vehicles for delivery of bone-inductive factors. Using ex vivo gene transfer methods, we genetically engineered freshly isolated human skeletal muscle cells with adenovirus and retrovirus to express human bone morphogenetic protein 2 (BMP-2). These cells were then implanted into nonhealing bone defects (skull defects) in severe combined immune deficiency (SCID) mice. The closure of the defect was monitored grossly and histologically. Mice that received BMP-2-producing human muscle-derived cells experienced a full closure of the defect by 4 to 8 weeks posttransplantation. Remodeling of the newly formed bone was evident histologically during the 4- to 8-week period. When analyzed by fluorescence in situ hybridization, a small fraction of the transplanted human muscle-derived cells was found within the newly formed bone, where osteocytes normally reside. These results indicate that genetically engineered human muscle-derived cells enhance bone healing primarily by delivering BMP-2, while a small fraction of the cells seems to differentiate into osteogenic cells.