Treatment of genetic or degenerative diseases severely affecting the entire skeleton may necessitate gene therapy involving transplantation of multipotential marrow cells. The ability of in vitro expanded adherent marrow cells enriched in pluripotent mesenchymal cell populations to remain competent to engraft, repopulate host tissues, and differentiate into bone and cartilage is advantageous for correction of skeletal-related diseases. However, to achieve phenotypic specificity and therapeutic or physiologic levels of proteins may require cell type specific expression of the gene. Tissue-specific promoter-controlled transgenes provide an efficacious approach to deliver therapeutic gene expression to repopulating chondrocytes and osteoblasts for treatment of cartilage and bone disorders or tumor metastasis to the skeleton. The bone-specific expression of a reporter gene controlled by the osteoblast-specific osteocalcin promoter after transplantation of a mixed population of marrow cells is shown. Tissue-restricted gene therapy potentially can be refined by use of a unique peptide targeting signal that directs the hematopoietic, chondrogenic, and osteogenic core binding factor/acute myelogenous leukemia transcription factors to subnuclear sites that support gene expression.