Human bone marrow stromal cells (hMSCs) were stably transduced by a retroviral vector containing the gene for the catalytic subunit of human telomerase (hTERT). Transduced cells (hMSC-TERTs) had telomerase activity, and the mean telomere length was increased as compared with that of control cells. The transduced cells have now undergone more than 260 population doublings (PD) and continue to proliferate, whereas control cells underwent senescence-associated proliferation arrest after 26 PD. The cells maintained production of osteoblastic markers and differentiation potential during continuous subculturing, did not form tumors, and had a normal karyotype. When implanted subcutaneously in immunodeficient mice, the transduced cells formed more bone than did normal cells. These results suggest that ectopic expression of telomerase in hMSCs prevents senescence-associated impairment of osteoblast functions.