Tumor cells become sensitive to the inert prodrug cyclophosphamide (CPA) after transfer of the gene encoding cytochrome P450 2B1. This enzyme activates CPA into 4-hydroxycyclophosphamide, which ultimately degrades into acrolein and phosphoramide mustard, the anticancer and DNA-alkylating metabolite. It is imperative that any prodrug-activating gene therapy strategy against cancer possess the capacity to affect the proliferation of tumor cells even when they do not express the transgene (bystander effect), because current methodologies cannot achieve gene transduction in all tumor cells. Prodrug-activating gene therapy schemes described to date exhibit a bystander effect that is not mediated by conditioned medium in culture and may depend on cell contact. In contrast, we find that CPA-sensitized, P450-expressing C6 glioma cells (C6-P450) transfer cytotoxicity to nonexpressing cells by releasing diffusible metabolites through the medium. A 3-h exposure to the prodrug is necessary and sufficient to achieve killing of the transfected cells, and medium conditioned by these cells can kill untransfected cells with similar potency. This bystander effect occurs in the presence of CPA even when only 10% of cells in culture express the P450 2B1 gene, and it is not reproduced by cells that have been irradiated. In an animal model of intracerebral brain tumors, expression of the P450 2B1 gene within the neoplastic cells enhanced significantly the antitumor effect of CPA, even when it was administered systemically. This study shows that CPA/P450 2B1 gene therapy represents a novel tumor-killing strategy that displays an expanded range of cytotoxic action both spatially and temporally within tumor cells and significantly potentiates the anticancer action of CPA when administered i.v.