Gene therapy for beta-thalassemia requires stable transfer of a beta-globin gene into hematopoietic stem cells (HSCs) and high and regulated hemoglobin expression in the erythroblastic progeny. We developed an erythroid-specific lentiviral vector driving the expression of the human beta-globin gene from a minimal promoter/enhancer element containing two hypersensitive sites from the beta-globin locus control region. Transplantation of transduced HSCs into thalassemic mice leads to stable and long-term correction of anemia with all red blood cells expressing the transgene. A frequency of 30-50% of transduced HSCs, harboring an average vector copy number per cell of 1, was sufficient to fully correct the thalassemic phenotype. In the mouse model of Cooley's anemia transplantation of transduced cells rescues lethality, leading to either a normal or a thalassemia intermedia phenotype. We show that genetically corrected erythroblasts undergo in vivo selection with preferential survival of progenitors harboring proviral integrations in genome sites more favorable to high levels of vector-derived expression. These data provide a rationale for a gene therapy approach to beta-thalassemia based on partially myeloablative transplantation protocols.