Objective: The present study aimed to investigate the effect of the transplantation of basic fibroblast growth factor (FGF-2) gene-transfected mesenchymal stem cells (MSCs) and xenogeneic antigen-cancellous bone (XACB) on tumor necrosis factor-α (TNF-α) expression with avascular necrosis of the femoral head (ANFH) in rabbits. Methods: The models of steroid-induced osteonecrosis in rabbits were randomly divided into five groups: A (model), B (XACB), C (XACB + MSCs), D (XACB + MSCs + LV), and E (XACB + MSCs + LV-FGF-2) groups. The therapeutic effect was evaluated by Hematoxylin and Eosin (H&E) staining. Immunohistochemical and RT-PCR assays were used to detect the protein and mRNA expression of TNF-α in the femoral head, respectively. Results: At 12 weeks after the operation, the defect in rabbits in group E was completely repaired, while defects in rabbits in the other groups were not completely repaired, and the area of new bone formation was higher, when compared with the other groups (P<0.05). Furthermore, the protein and mRNA expression TNF-α was lower at 3, 6, and 12 weeks after surgery, when compared with the other groups, and the difference was statistically significant (P<0.05). Conclusion: FGF-2/MSCs/XACB could promote the repair of ANFH, and may be correlated to the inhibition of TNF-α expression.