A number of hormonal factors have been shown to be instrumental in the calcification process. This study represents an attempt at using one of these factors to specifically induce calcification of tumors to arrest tumor growth. The gene encoding bone morphogenetic protein 2 (BMP-2) was placed under transcriptional control of the promoter for carcinoembryonic antigen (CEA). This gene cassette was cloned into a herpes simplex virus (HSV) amplicon vector (HSV-CEA-BMP2). This vector was used to induce local BMP-2 production in CEA-expressing tumor cells to retard cell growth. Lysates of tumor cells treated with HSV-CEA-BMP2 were applied to stem cells to determine if BMP-2 expression promotes differentiation to bone lineage. pHSV-CEA-BMP2 efficiently transduced both CEA-expressing and non-expressing cells. BMP-2 was only expressed in CEA-positive cells. BMP-2 expression led to an inhibition of tumor cell growth. BMP-2 released by these CEA-expressing tumors also drove the differentiation of mesenchymal stem cells to bone lineage. This proof-of-concept study demonstrates that tumor cells can be specifically engineered to produce BMP-2, which leads to growth retardation and to the differentiation of non-committed stem cells to bone. This 'Medusa' effect can theoretically be exploited to retard tumor growth.Cancer Gene Therapy advance online publication, 16 October 2009; doi:10.1038/cgt.2009.56.