This study reports that recombinant adenovirus-mediated human bone morphogenetic protein-2 gene transfer can induce mesenchymal progenitor cell differentiation and bone formation. The recombinant adenovirus with the human bone morphogenetic protein-2 gene was constructed, and mature human bone morphogenetic protein-2 expression mediated by adenovirus gene transfer was detected by specific antibody. Under adenovirus-mediated bone morphogenetic-protein gene transfer, mesenchymal progenitor cell line C3H/10T 1/2 showed cell proliferation dependent on adenovirus bone morphogenetic-protein dose. The C3H/10T 1/2 cells transduced by adenovirus bone morphogenetic protein also exhibited differentiation to osteoblast phenotype, which indicates alkaline phosphatase activity. Injection of the C3H/10T 1/2 cells into the thigh muscles of nude mice led to ossicle development detectable on radiographs. Histological analysis indicated that the new ossicles that developed in the thigh muscles of the mice had different osseous components including bone trabeculae, bone marrow, and chondrified tissue. The results of this study demonstrate the potential for gene therapy by adenovirus-mediated bone morphogenetic-protein gene transfer.