Bone morphogenetic proteins (BMPs) are polypeptides that induce ectopic bone formation in standard rat in vivo assay systems. Previous studies have demonstrated the clinical utility of these proteins in spinal fusion, fracture healing, and prosthetic joint stabilization. Gene therapy is also a theoretically attractive technique to express BMPs clinically, since long-term, regulatable gene expression and systemic delivery with tissue-specific expression may be possible in future. This study was performed to determine whether an adenoviral vector containing the BMP-2 gene can be used to express BMP-2 in vitro and promote endochondral bone formation in vivo. In vitro, U87 MG cells transduced per cell with 20 MOI of an adenoviral construct containing the BMP-2 gene under the control of the universal CMV promoter (Ad-BMP-2) showed positive antibody staining for the BMP-2 protein at posttransfection day 2. The synthesis and secretion of active BMP-2 into the conditioned medium of Ad-BMP-2-transduced 293 cells were confirmed by Western blot analysis and the induction of alkaline phosphatase activity in a W-20 stromal cell assay. In vivo, Sprague-Dawley rats and athymic nude rats were injected with Ad-BMP-2 in the thigh musculature and were sacrificed on day 3, 6, 9, 12, 16, 21, 60, and 110 for histological analysis. The Sprague-Dawley rats showed evidence of acute inflammation, without ectopic bone formation, at the injection sites. In the athymic nude rats, BMP-2 gene therapy induced mesenchymal stem cell chemotaxis and proliferation, with subsequent differentiation to chondrocytes. The chondrocytes secreted a cartilaginous matrix, which then mineralized and was replaced by mature bone. This study demonstrates that a BMP-2 adenoviral vector can be utilized to produce BMP-2 by striated muscle cells in athymic nude rats, leading to endochondral bone formation. However, in immunocompetent animals the endochondral response is attenuated, secondary to the massive immune response elicited by the first-generation adenoviral construct.