Baculovirus has emerged as a novel vector for in vitro and in vivo gene delivery due to its low cytotoxicity and non-replication nature in mammalian cells, but the applications of baculovirus in the genetic modification of human mesenchymal stem cells (hMSCs) and tissue engineering are yet to be reported. In this study, we genetically engineered hMSCs with a baculovirus (Bac-CB) expressing bone morphogenetic protein-2 (BMP-2). Bac-CB transduction of hMSCs at a multiplicity of infection of 40 triggered effective differentiation of hMSCs into osteoblasts. Supertransduction at day 6 after initial transduction enhanced the BMP-2 expression and further accelerated the in vitro osteogenesis, as confirmed by alkaline phosphatase assay, Alizarin red staining and reverse transcription-polymerase chain reaction analysis of osteoblastic genes. Implantation of the supertransduced cells at ectopic sites in the nude mice resulted in efficient cell differentiation into osteoblasts at week 2 and induced progressive mineralization and partial bone formation at week 6, as confirmed by hematoxylin and eosin, immunohistochemical and Alizarin red staining. These data collectively demonstrated, for the first time, the potential of baculovirus in hMSCs engineering and implicated its use in bone tissue engineering.