The need to improve bone healing permeates the discipline of orthopedic surgery. Bone morphogenetic proteins (BMPs) are capable of inducing ectopic and orthotopic bone formation. However, the ideal approach with which to deliver BMPs remains unknown. Gene therapy to deliver BMPs offers several theoretical advantages over implantation of a recombinant BMP protein, including persistent BMP delivery and eliminating the need for a foreign body carrier. A replication defective adenoviral vector was constructed to carry the rhBMP-2 gene (AdBMP-2). The direct in vivo gene therapy approach was applied in both immunodeficient and immunocompetent animals to produce intramuscular bone as early as 2 weeks following injection. Radiographic and histologic analysis revealed radiodense bone containing mature bone marrow elements. Adenovirus-mediated delivery of a marker gene (beta-galactosidase) into control animals produced no bone but indicated the cells transduced with the AdBMP-2 vector. Furthermore, comparisons between immunodeficient and immunocompetent animals illustrated the magnitude and significance of the immune response. Gene therapy to deliver BMP-2 has innumerable potential clinical applications from bone defect healing to joint replacement prosthesis stabilization. This study is the first to establish the feasibility of in vivo gene therapy to deliver active BMP-2 and produce bone.