Bone morphogenetic protein 2 (BMP2) was selected as a transgene to regenerate osteoporotic bone defects after several BMPs were tested using a bone formation study in nude mice. Human chondrocytes were transduced with a BMP2-containing retroviral vector, and single clones were selected. The cells were characterized over numerous passages for growth and BMP2 expression. The single clones were irradiated and tested for viability. BMP2 expression lasted for 3 weeks before dying off completely after approximately 1 month. Irradiated and non-irradiated transduced chondrocytes successfully healed fractures in osteoporotic rats induced by ovariectomy. The osteoinducing effect of irradiated cells was better than that of their non-irradiated counterparts or a chondrocytes-only control. This study showed that delivering BMP2 from the transduced and irradiated chondrocytes could be an effective and safe method of repairing osteoporotic bone fractures.