In this preliminary report, we describe a technique for gene transfer into the retina using a retrovirus vector. We transferred the bacterial LacZ gene and the neomycin-resistance gene into pigmented wild-type rat retinal pigment epithelial (RPE) cells in culture. The RPE culture was exposed to retrovirus, and infected cells were selected with a neomycin analog (G418). The LacZ gene product was detected by X-Gal histochemistry in 95-100% of drug-resistant cells. These genetically labeled cells were transplanted into the subretinal space of two 15- to 25-day-old albino RCS rats, which have an inherited retinal degeneration syndrome. The retinas were fixed and stained with X-Gal at 3 and 6 weeks after transplantation. At both time points, pigmented, LacZ-containing cells were seen in the subretinal space. Further, there were several rows of photoreceptor nuclei in the transplant area of the approximately 2-month-old rats, while in the control contralateral eye the photoreceptor nuclei were virtually absent, as for untreated animals, suggesting that the transplanted LacZ-marked, wild-type RPE cells may have helped preserve photoreceptors. The technique for gene transfer into RPEs followed by transplantation thus provides a means for gene therapy in organisms with a genetic defect in RPE cells.