Bone marrow stromal cells contain mesenchymal stem cells that can differentiate into a variety of mesenchymal tissues; in the presence of BMP-2, for example, they differentiate into osteoblasts. We constructed replication-deficient adenoviral vectors encoding human BMP-2 (BMP-2/Ad) or BMP-4 (BMP-4IAd) and used them to transduce primary bone marrow stromal cells from the femurs of four-week-old female C3H mice, which then expressed and processed functional BMP-2 or BMP-4 protein. Enzyme assays and histochemical staining showed both groups of cells to possess alkaline phosphatase activity, a marker of differentiation into osteoblasts, though the activity was higher in cells transduced with BMP-2IAd. When BMP-2IAd-transduced cells were injected into the thigh muscles of immunocompetent C3H mice, ossicle development was detected on radiographs within four weeks after injection. Moreover, histological analysis indicated that newly developed ossicles contain mature osseous components, including cortical bone and bone marrow, within eight weeks. Thus, syngeneic transplantation of genetically modified primary bone marrow stroinal cells induced bone formation in immunocompetent mice, perhaps indicating its potential for use in the development of therapeutic protocols aimed at enhancing bone formation.