Objective: To evaluate the osteogenic potential of bone morphogenetic protein (BMP)-2 gene transfected goat bone marrow-derived mesenchymal stem cells (MSCs). Methods: Goat bone marrow- derived MSCs were transfected by Adv-human bone morphogenetic protein (hBMP)-2 gene(Group 1), Adv-beta gal transfected MSCs (Group 2)and uninfected MSCs(Group 3). West blot analysis, alkaline phosphatase staining, Von Kossa staining and transmission electron microscopy were adopted to determine the phenotype of MSCs. Then the cells were injected into thigh muscles of the nude mice. Radiographical and histological evaluations were performed at different intervals. Results: Only Adv-hBMP-2 transfected MSCs produced hBMP-2. These cells were positive for alkaline phosphatase staining at the 12th day and were positive for Von Kossa staining at the 16th day after gene transfer. Electron microscopic observation showed that there were more rough endoplasmic reticulum, mitochondria and lysosomes in Adv-hBMP-2 transfected MSCs compared to MSCs of other two groups. At the 3rd and 6th weeks after cell injection, ectopic bones were observed in muscles of nude mice of Group 1. Only fibrous tissue or a little bone was found in other two groups. Conclusions: BMP-2 gene transfected MSCs can differentiate into osteoblasts in vitro and induce bone formation in vivo.