Background Tissue engineering techniques combined with gene therapy have been recently used to improve osteogenesis. NEL-like molecule-1 (Nell-1), a novel growth factor, has been reported to have specificity for osteochondral lineage. The study assessed the osteogenic differentiation of rat bone marrow stromal cells (bMSCs) after Nell-1 gene modification and examined its ectopic bone formation ability in a nude mice model with tissue engineering technique.Methods bMSCs obtained from Fischer 344 rats were transduced with either AdNell-1 (Nell-1 group) or Ad-β-galactosidase (AdLacZ, LacZ group) or left untransduced (untransduced group). The expression of Nell-1 protein was determined by West blotting and transfer efficiency was assessed, mRNA expressions of osteopontin (OP), bone sialoprotein (BSP) and osteocalcin (OC) were assessed by real-time PCR 0, 3, 7, 14, and 21 days after gene transfer. Alkaline phosphatase (ALP) activity was measured and von Kossa test was also conducted. Finally, with a tissue engineering technique, gene transduced bMSCs, combining with β-tricalcium phosphate (β-TCP) at a concentration of 2×107 cells/ml, were implanted at subcutaneous sites on the back of nude mice. Four weeks after surgery, the implants were evaluated with histological staining and computerized analysis of new bone formation.Results Under current transduction conditions, gene transfer efficiency reached (57.9±6.8)%. Nell-1 protein was detected in Nell-1 group but not in untransduced group and LacZ group. Induced by Nell-1, BSPand OPexpression were increased at intermediate stage and OC expression was increased at later stage. ALP activity and the number of calcium nodules were highest in Nell-1 group. Four weeks after implanted into nude mice subcutaneously, the percentage of new bone area in Nell-1 group was (18.1±5.0)%, significantly higher than those of untransduced group (11.3±3.2)% and LacZ group (12.3±3.1)% (P<0.05).Conclusions This study has demonstrated the ability of Nell-1 to induce osteogenic differentiation of rat bMSCs in vitro and to enhance bone formation with a tissue engineering technique. The results suggest that Nell-1 may be a potential osteogenic gene to be used in bone tissue engineering.