Structural bone allografts often fracture due to their lack of osteogenic and remodeling potential. To overcome these limitations, we utilized allografts coated with recombinant adeno-associated virus (rAAV) that mediate in vivo gene transfer. Using beta-galactosidase as a reporter gene, we show that 4-mm murine femoral allografts coated with rAAV-LacZ are capable of transducing adjacent inflammatory cells and osteoblasts in the fracture callus following transplantation. While this LacZ vector had no effect on allograft healing, bone morphogenetic protein signals delivered via rAAV-caAlk2 coating induced endochondral bone formation directly on the cortical surface of the allograft by day 14. By day 28 there was evidence of remodeling of the new woven bone and massive osteoclastic resorption of the cortical surface of the rAAV-caAlk2-coated allografts only. Micro-CT analysis of rAAV-LacZ- vs rAAV-caAlk2-coated allografts after 42 days of healing demonstrated a significant increase in new bone formation (0.67 +/- 0.21 vs 2.49 +/- 0.40 mm(3); P < 0.005). Furthermore, the 3D micro-CT images of femurs grafted with rAAV-Alk2-coated allografts provided the first evidence that complete bridging of bone around a cortical allograft is possible. These results indicate that cell-free, rAAV-coated allografts have the potential to revitalize in vivo following transplantation.