Mesenchymal Stem Cells (MSCs) are key regulators in senile osteoporosis and in bone formation and regeneration. MSCs are therefore suitable candidates for stem cells mediated gene therapy of bone. Recombinant human Bone Morphogenetic Protein-2 (rhBMP-2) is a highly osteoinductive cytokine, promoting osteogenic differentiation of MSCs. We hypothesized that genetically engineered MSCs, expressing rhBMP2, can be utilized for targeted cell mediated gene therapy for local and systemic bone disorders and for bone/cartilage tissue engineering. Engineered MSCs expressing rhBMP-2 have both autocrine and paracrine effects enabling the engineered cells to actively participate in bone formation. We conditionally expressed rhBMP2 (tet-controlled gene expression, tet-off system) in mouse and human mesenchymal stem cells. RhBMP2 expressing clones (tet-off and adeno-BMP2 infected MSCs), spontaneously differentiated into osteogenic cells in vitro and in vivo. Engineered MSCs were transplanted locally and tracked in vivo in radial segmental defects (regenerating site) and in ectopic muscular and subcutaneous sites (non-regenerating sites). In vitro and in vivo analysis revealed rhBMP2 expression and function, confirmed by RT-PCR, ELISA, western blot, immunohistochemistry and bioassays. Secretion of rhBMP2 in vitro was controlled by tetracycline and resulted in secretion of 1231 ng/24 hours/106 cells. Quantitative Micro-CT 3-Dimentional reconstruction revealed complete bone regeneration regulated by tetracycline in vivo, indicating the potential of this platform for bone and cartilage tissue engineering. Angiogenesis, a crucial element in tissue engineering, was increased by 10-folds in transplants of rhBMP2 expressing MSCs (tet-off), shown by histomorphometry and MRI analysis (p<
0.05). In order to establish a gene therapy platform for systemic bone disorders, MSCs with tet-controlled rhBMP-2 expression, were injected systemically (iv). These engineered MSCs were genetically modified in order to achieve homing to the bone marrow. Systemic non invasive tracking of engineered MSCs was achieved by recording topographical bioluminescence derived from luciferase expression detected by a coupled charged CCD imaging camera. For clinical situations that require immuno-isolation of transplanted cells, we developed an additional platform utilizing cell encapsulation technique. Immuno-isolated engineered MSCs, with tet-controlled rhBMP-2 expression, encapsulated with sodium alginate induced bone formation by paracrine effect of secreted rhBMP-2. Finally, we have characterized a novel tissue-engineering platform composed of engineered MSCs and biodegradable polymeric scaffolds, creating a 3D bone tissue in rotating Bioreactors. Our results indicate that engineered MSCs and polymeric scaffolds can be utilized for ex vivo bone tissue engineering. We therefore conclude that genetically engineered MSCs expressing rhBMP-2 under tetracycline control are applicable for: a) local and systemic gene therapy to bone, and b) bone tissue engineering. Our studies should lead to the creation of gene therapy platforms for systemic and local bone diseases in humans and bone/cartilage tissue engineering.