We have developed an ex vivo gene transfer technique to rabbit arterial wall using autologous smooth muscle cells (SMCs). SMCs were harvested from rabbit ear artery, transduced in vitro with vesicular stomatitis virus G-glycoprotein pseudotyped retrovirus or feline immunodeficiency virus (FIV) and returned to the adventitial surface of the carotid artery using a periadventitial silicone collar or collagen sheet placed around the artery. Beta-galactosidase (lacZ) and human apolipoprotein E3 (apoE3) cDNAs were used as transgenes. After retrovirus-mediated gene transfer of lacZ the selected cells implanted with high efficiency and expressed lacZ marker gene at a very high level 7 and 14 days after the operation. The level of lacZ expression decreased thereafter but was still detectable 12 weeks after the gene transfer, and was exclusively localized to the site of cell implantation inside the collar. Utilizing FIV vector expressing apoE3, low levels of apoE were measured from serum collected from a low-density lipoprotein receptor deficient Watanabe heritable hyperlipidemic rabbits 1 month after the gene transfer. The physiological effect of apoE expression was detected as transiently elevated serum cholesterol levels. The results indicate that the model can be used for high efficiency local gene transfer in arteries, e.g. during vascular surgery. The model is also valuable for studying expression, stability and safety of new gene transfer vectors and their expression products in vivo.