To induce osteogenicity in bone graft substitutes, plasmid-based expression of BMP-2 (pBMP-2) has been successfully applied in gene activated matrices based on alginate polymer constructs. Here, we investigated whether cell seeding is necessary for non-viral BMP-2 gene expression in vivo. Furthermore, to gain insight in the role of BMP-producing cells, we compared inclusion of bone progenitor cells with non-osteogenic target cells in gene delivery constructs. Plasmid DNA encoding GFP (pGFP) was used to trace transfection of host tissue cells and seeded cells in a rat model. Transgene expression was followed in both cell-free alginate-ceramic constructs as well as constructs seeded with syngeneic fibroblasts or multipotent mesenchymal stromal cells (MSCs). Titration of pGFP revealed that the highest pGFP dose resulted in frequent presence of positive host cells in the constructs. Both cell-loaded groups were associated with transgene expression, most effectively in the MSC-loaded constructs. Subsequently, we investigated effectiveness of cell-free and cell-loaded alginate-ceramic constructs with pBMP-2 to induce bone formation. Local BMP-2 production was found in all groups containing BMP-2 plasmid DNA, and was most pronounced in the groups with MSCs transfected with high concentration pBMP-2. Bone formation was only apparent in the recombinant protein BMP-2 group. In conclusion, we show that non-viral gene delivery of BMP-2 is a potentially effective way to induce transgene expression in vivo, both in cell-seeded as well as cell-free conditions. However, alginate-based gene delivery of BMP-2 to host cells or seeded cells did not result in protein levels adequate for bone formation in this setting, calling for more reliable scaffold compatible transfection methods.