A major problem of tumor gene therapy is the low transduction efficiency of the currently available vectors. One way to circumvent this problem is the delivery of therapeutic genes encoding intracellular enzymes for the conversion of a prodrug to a cytotoxic drug which can then spread to neighboring non-transduced cells (bystander effect). One possibility to improve the bystander effect could be the extracellular conversion of a hydrophilic prodrug to a lipophilic, cell-permeable cytotoxic drug. Toward this end, we have used a secreted form of the normally lysosomal human beta-glucuronidase (s-betaGluc) to establish an extracellular cytotoxic effector system that converts an inactivated glucuronidated derivative of doxorubicin (HMR 1826) to the cytotoxic drug. We demonstrate that s-betaGluc-transduced tumor cells convert HMR 1826 to doxorubicin which is taken up by both transduced and non-transduced cells. s-betaGluc in combination with HMR 1826 efficiently induces tumor cell killing both in cell culture and in vivo. This effect is mediated through a pronounced bystander effect of the generated cytotoxic drug. Most notably, this gene therapeutic strategy is shown to be clearly superior to conventional chemotherapy with doxorubicin. Gene Therapy (2000) 7, 224-231.