Aim: Bone morphogenetic protein 4 (BMP4) is one of the main local contributing factors in callus formation in the early phase of fracture healing. Adipose-derived stromal cells (ADSC) are multipotent cells. The present study was conducted to investigate the osteogenic potential of ADSC when exposed to adenovirus containing BMP4 cDNA (Ad-BMP4). Methods: ADSC were harvested from Sprague-Dawley rats. After exposure to Ad-BMP4, ADSC were assessed by alkaline phos-phatase activity (ALP) assay, RT-PCR and von Kossa staining. BMP4 expression was assessed by RT-PCR, immunofluorescence and Weste blot analysis. ADSC transduced with Ad-BMP4 were directly injected into the hind limb muscles of athymic mice. ADSC Ad-EGFP(enhanced green fluorescence protein) served as controls. All animals were examined by X-ray film and histological analysis. Results: The expression of BMP4 was confirmed at both mRNA and protein levels. The expression of the osteoblastic gene, ALP activity and von Kossa staining confirmed that ADSC transduced with Ad-BMP4 underwent rapid and marked osteoblast differentiation, whereas ADSC transduced with Ad-EGFP and cells left alone displayed no osteogenic differentiation. X-ray and histological examination confirmed new bone formation in athymic mice transplanted with ADSC transduced with Ad-BMP4. Conclusion: Our data demonstrated successful osteogenic differentiation of ADSC transduced with Ad-BMP4 in vitro and in vivo. ADSC may be an ideal source of mesenchyme lineage stem cells for gene therapy and tissue engineering.