Clinical application of gene therapy for genetic and malignant diseases has been limited by inefficient stem cell gene transfer. Here we studied in a clinically relevant canine model whether genetic chemoprotection mediated by a mutant of the DNA-repair enzyme methylguanine methyltransferase could circumvent this limitation. We hypothesized that genetic chemoprotection might also be used to enhance allogeneic stem cell transplantation, and thus we evaluated methylguanine methyltransferase-mediated chemoprotection in an allogeneic setting. We demonstrate that gene-modified allogeneic canine CD34+ cells can engraft even after low-dose total body irradiation conditioning. We also show that cytotoxic drug treatment produced a significant and sustained multilineage increase in gene-modified repopulating cells. Marking in granulocytes rose to levels of up to 98%, the highest in vivo marking reported to date to our knowledge in any large-animal or human study. Increases in transgene-expressing cells after in vivo selection provided protection from chemotherapy-induced myelosuppression, and proviral integration site analysis demonstrated the protection of multiple repopulating clones. Drug treatment also resulted in an increase in donor chimerism. These data demonstrate that durable, therapeutically relevant in vivo selection and chemoprotection of gene-modified cells can be achieved in a large-animal model and suggest that chemoprotection can also be used to enhance allogeneic stem cell transplantation.