Failed fracture healing is a significant problem in orthopaedics, often seen in patients with scaphoid fractures, high-energy injuries, and osteoporosis. Current treatments often result in poor outcomes and donor site morbidity. Gene therapy has been the focus of much recent research to improve bone healing. In the current review, the authors specifically evaluate the use of muscle-derived cells as a gene delivery vehicle and inducible osteoprogenitor cell that can enhance bone regeneration. Muscle-derived cells have been used to deliver bone morphogenetic protein-2 and produce ectopic bone. These cells express osteocalcin and have been found within newly generated bone in locations normally occupied by osteoblasts and osteocytes. Finally, it is shown that muscle-derived cells coupled with ex vivo gene therapy can heal critical-sized calvarial defects.