Bone marrow (BM) cells are attractive target cells for ex vivo gene therapy of genetic diseases, including haemophilia A. However, BM-derived haematopoietic stem/progenitor cells (HSCs) transduced with factor VIII (FVIII) retroviral vectors, failed to express FVIII in vivo. To overcome the limitations of HSCs for haemophilia gene therapy, BM-derived mesenchymal cells were explored as alternative target cells. The BM mesenchymal cell population contains self-renewing mesenchymal stem/progenitor cells that give rise to different mesenchymal lineages and have been used safely in phase I gene-marking trials. Human BM mesenchymal cells were transduced in vitro with an improved retroviral vector encoding a human B-domain deleted FVIII (hFVIIIdeltaB) cDNA (MND-MFG-hFVIIIdeltaB). This vector contains multiple modifications in the cis-acting elements within the MoMLV long-terminal repeats (LTR) that prevent the binding of repressive transcription factors. These modifications were previously shown to increase and prolong gene expression in embryonic stem (ES) cells and HSCs. Transduction of BM mesenchymal cells with the MND-MFG-hFVIIIdeltaB retroviral vector resulted in high levels of functional human FVIII in vitro, ranging between 300 +/- 50 SD and 700 +/- 100 SD mU per 106 cells per 24 h. Following xenografting of the transduced human BM cells into immunodeficient NOD-SCID mice, therapeutic hFVIII levels of 12 +/- 10 ng mL-1 were detected in the plasma. Polymerase chain reaction analysis demonstrated long-term engraftment (>3 months) of the human BM mesenchymal cells. The long-term persistence of BM mesenchymal cells in the absence of myelo-ablative conditioning and the therapeutic FVIII levels in vivo underscore the potential usefulness of BM-derived mesenchymal cells for haemophilia gene therapy, as opposed to BM-derived HSCs. Despite the modifications of the MoMLV LTR, FVIII expression declined, which coincided with a decrease in FVIII mRNA transcription levels, indicating that the salutary effect of the LTR modification on transgene expression is not universally applicable to all cell types.