A retroviral gene therapy approach was developed to protect early hematopoietic progenitors from 1,3-bis(2-chloroethyl)-1-nitrosourea (BCNU), a stem cell toxin, and O⁶-benzylguanine (BG), an inhibitor of a key BCNU resistance protein, O⁶-alkylguanine DNA alkyltransferase (AGT). The retroviral vector MFG was used to transfer the G156A MGMT (ΔMGMT) cDNA, encoding a mutant AGT that is resistant to inhibition by BG, into murine bone marrow-derived hematopoietic progenitors. Following transplantation into lethally irradiated mice, the transduced cells were subjected to in vivo BG and BCNU treatment to examine the ability to enrich for transduced cells expressing ΔAGT. Transplantation of ΔMGMT-transduced cells resulted in δAGT expression in 30% of bone marrow nucleated cells 13 weeks after transplantation. After one cycle of BG and BCNU, ΔAGT expression was observed in 60% of bone marrow cells, and the percentage of colony-forming units (culture; CFU-C) containing proviral sequence increased from 67 to 100%. CFU-C obtained from BG and BCNU-treated ΔMGMT animals up to 23 weeks after transplantation were more resistant to combination BG and BCNU than CFU-C from mice transplanted with lacZ-transduced cells and treated with BG and BCNU or from mice transplanted with ΔMGMT-transduced cells and left untreated. The degree of drug resistance in ΔMGMT-transduced hematopoietic progenitors to BG and BCNU was much greater than we observed previously with wild-type MGMT gene transfer and treatment with BCNU alone. Furthermore, whereas 21 of 22 mice transplanted with ΔMGMT-transduced cells survived in vivo BG and BCNU administration, only 3 of 13 mice transplanted with lacZ-transduced progenitors survived similar drug treatment. Thus, ΔMGMT-transduced murine bone marrow cells selectively survive in vivo BG and BCNU exposure, resulting in prolonged enrichment for the transduced cells and protection from mortality induced by this drug combination.