Cell-mediated gene therapy is one of the new modalities branching out from the wide-ranging field of gene transfer and therapy. When applied to bone formation and regeneration, it has particular advantages depending on the type of cell used as a platform for gene delivery. When utilizing adult mesenchymal stem cells or osteoprogenitor cells for the expression of bone-promoting osteogenic factors, the cells not only express the factors promoting bone growth, but can respond, differentiate and participate in the bone formation process. The ability of engineered cells to respond to the transgene, as well as to other local signals in vivo, confers on them special properties that enable the formation and regeneration of large-scale bone tissue. This approach is a paradigm for the development of gene therapy strategies for other skeletal tissues. Here, we review the most recent studies related to cell-mediated gene therapy for bone formation and regeneration.