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To explore a new source of adult derived stem cells for musculoskeletal tissue repair and regeneration, we isolated rabbit adipose-derived mesenchymal stem/progenitor cells (rAMSCs) from adult rabbit adipose tissue. in vitro, the isolated cells were shown to possess the potential to differentiate into cells of mesenchymal lineages that include osteoblasts. The isolated cells were transduced with AAV2 vectors encoding eGFP, human BMP-2, and human TGF-β1 genes prior to implantation into hind limb muscles of SCID mice to assess osteogenesis in vivo. The results showed that rAMSCs were more efficiently transduced with GFP by AAV2 than by AAV6. The AAV2-BMP2- and AAV-TGF-β1- transduced rAMSCs showed efficient expression of BMP-2 and TGF-β1 proteins in vitro. When the combination of AAV2 BMP2- and AAV-TGF-β1-transduced rAMSCs were implanted into the thigh muscles of SCID mice, the cells osteogenically differentiated toward new bone formation at the implanted sites 15 days after implantation. This study demonstrates that rabbit adipose tissue contains cells with the potential to give rise to osteoblasts, and that the combination of AAV2-BMP-2- and AAV2-TGF-β1-transduced rAMSCs may provide a novel strategy to enhance new bone formation in vivo in less than 3 weeks. In addition, the data suggest that the AAV2 vector is suitable for genetic engineering of rAMSCs.