The ability of rabbit spermatozoa to bind exogenous DNA during sperm-mediated gene transfer (SMGT) was tested in our study. Fresh collected semen, or fully capacitated sperm cells, was co-cultured with plasmid DNA labeled with tetramethyrodamine-6-dUTP. Fluorescent spermatozoa were counted before and after DNaseI treatment. Results showed that fluorescent-labeled plasmid DNA could be taken up by capacitated rabbit sperm cells. 66% spermatozoa carried exogenous DNA in the presence of lipofectin. Bovine serum albumin could block this process effectively. Associated DNA was mainly located in the posterior area of the sperm head. In order to verify whether exogenous DNA was carried into the embryo and expressed in the offspring, further SMGT experiments were carried out using the pHM-CR plasmid which contains LacZ and Neomycin genes. beta-galactosidase was expressed in different stages of embryo development and in the tissues of young rabbit as detected by using X-gal staining. Large portion of embryos survived under the selection pressure in G418 containing medium, after SMGT. Transgene integration was further verified by PCR analysis. These results confirmed the ability of rabbit sperm cells to carry transgene into the embryo during in vitro fertilization.