Ex vivo gene therapy using stem cells transduced with viral vectors is a useful method for delivering a therapeutic protein to augment bone repair in animal models. However, the duration of cell-mediated protein production and the fate of the transduced cells are unknown. We constructed an adenoviral vector encoding Myc epitope tagged bone morphogenetic protein (BMP)-2 gene (AdBMP-2). Rat bone marrow cells transduced with this vector produced biologically active BMP-2 protein, which was confirmed by Western blot analysis and alkaline phosphatase assay. Implantation of bone marrow cells infected ex vivo with AdBMP-2 caused orthotopic bone formation in mouse hindlimbs and bony union of critical-sized mouse radial defects. Immunohistochemical analysis revealed that rBMCs expressed Myc epitope-tagged BMP-2 protein for 14 days in vivo and became incorporated in the endochondral fracture callus. This novel adenovirus encoding for epitope-tagged BMP-2 can be used for immunohistochemical tracking of transduced cells in ex vivo gene therapy for bone repair.