The ability to transfer new genetic material into human hematopoietic cells provides the foundation for characterizing the organization and developmental program of human hematopoietic stem cells. It also provides a valuable model in which to test gene transfer and long-term expression in human hematopoietic cells as a prelude to human gene therapy. At the present time such studies are limited by the absence of in vivo assays for human stem cells, although recent descriptions of the engraftment of human hematopoietic cells in immune-deficient mice may provide the basis for such an assay. This study focuses on the establishment of conditions required for high efficiency retrovirus-mediated gene transfer into human hematopoietic progenitors that can be assayed in vitro in short-term colony assays and in vivo in immune-deficient mice. Here we report that a 24-hour preincubation of human bone marrow in 5637-conditioned medium, before infection, increases gene transfer efficiency into in vitro colony-forming cells by sixfold; interleukin-6 (IL-6) and leukemia inhibitory factor (LIF) provide the same magnitude increase as 5637-conditioned medium. In contrast, incubation in recombinant growth factors IL-1, IL-3, and granulocyte-macrophage colony-stimulating factor increases gene transfer efficiency by 1.5- to 3-fold. Furthermore, preselection in high concentrations of G418 results in a population of cells significantly enriched for G418-resistant progenitors (up to 100%). These results, obtained using detailed survival curves based on colony formation in G418, have been substantiated by directly detecting the neo gene in individual colonies using the polymerase chain reaction. Using these optimized protocols, human bone marrow cells were genetically manipulated with a neo retrovirus vector and transplanted into immune-deficient bg/nu/xid mice. At 1 month and 4 months after the transplant, the hematopoietic tissues of these animals remained engrafted with genetically manipulated human cells. More importantly, G418-resistant progenitors that contained the neo gene were recovered from the bone marrow and spleen of engrafted animals after 4 months. These experiments establish the feasibility of characterizing human stem cells using the unique retrovirus integration site as a clonal marker, similar to techniques developed to elucidate the murine stem cell hierarchy.