Most chemotherapy regimens rely on systemic administration of drugs leading to a wide array of toxicities. Using viral-vector-mediated gene modification of muscle tissues, we have developed a method for gene-directed enzyme prodrug therapy that allows for localized drug administration. An inactive prodrug of geldanamycin was activated locally for inhibition of tumor growth without systemic toxicities. A recombinant adeno-associated virus (rAAV) was used to deliver β-galactosidase (LacZ) to the treatment group and green fluorescent protein to the control group. After 1 week, both groups received adenocarcinoma cells in the same location as the previous rAAV injection. The geldanamycin prodrug was administered 1 h later via intraperitoneal injection. Tumor growth was significantly suppressed in animals whose muscles were gene modified to express β-galactosidase compared with the control. Serum assay to access hepatotoxicity resulted in no significant differences between the animals treated with the inactive or activated form of geldanamycin, indicating minimal damage to non-target organs. Using gene-directed enzyme prodrug therapy, in combination with novel recombinant AAV vectors, we have developed a method for localized activation of chemotherapeutic agents that limits the toxicities seen with traditional systemic administration of these potent drugs.