Background: Systemic administration of interferon-alpha (IFN-alpha) results in cytogenetic remissions and enhanced survival in a significant percentage of patients with chronic mylogenous leukemia (CML) and lymphoma. However, this treatment is associated with deleterious toxic effects, Gene transfer of the IFN-alpha gene into hematopoietic progenitors represents a novel strategy to deliver high concentrations of IFN-alpha to a local area. Methods: We compared the effect of the transfer of the IFN-alpha gene on the cell. growth and differentiation of several CD34(+) cells in culture and in a NOD/SCID animal model, using adenovirus and retrovirus constructs, Results: Transient local expression of the IFN-alpha gene using an adenovirus vector was associated with normal proliferation of CD34(+) progenitors as measured by a colony forming unit of granulocyte-macrophage (CFU-GM) growth. Flow cytometric determination revealed that there was no significant difference in viability of these cells for 24-hour transduction periods. Reverse transcriptase/polymerase chain reaction (RT-PCR) analysis of RNA from CD34(+) harvested CFU-GM progenitors demonstrated expression of IFN-alpha mRNA; radioimmunoassay (RIA) revealed that transduced cells secreted substantial levels of IFN-alpha protein. Furthermore, se constructed a retroviral vector in which IFN-alpha cDNA nas driven by a viral LTR promoter to evaluate the effect of permanent IFN-alpha: gene expression on cell growth. Retroviral packaging cells PA317 with high titers of retrovirus were produced and used to infect CD34(+) and K562 cells, RIA showed that IFN-alpha-transduced CD34(+) cells (with the aid of fibronectin fragment CH-296) produced approximately 400 units of IFN-alpha protein compared to CD34(+) cells, or cells transduced with empty vector, IFN-alpha transduced CD34(+) generated similar numbers of CFU-GM colonies as compared to control CD34(+) cells, Engraftment of CD34(+) cells transduced with IFN-alpha gene in NOD/SCID mice nas successful for the first 30 days. Additionally, we studied the effect of local IFN-alpha expression on the cellular adhesion molecules, VLA-4, Mac-1, ICAM-1, and L-selectin in K562 cells, and human unbilical endothelial vein cells, K562 cells transduced with the IFN-alpha gene expressed a significantly elevated level of VLA-4, Mac-1, and ICAM-1. Conclusion: We conclude that expression of the IFN-alpha gene using retrovirus vectors results in an adequate localized expression of IFN-alpha mRNA and protein.