Adeno-associated virus (AAV) is so far the most valuable vehicle for gene therapy because it has no association with immune response and human disease. The present study was conducted to investigate the feasibility of AAV-mediated BMP4 gene transfer for bone formation. In vitro study suggested that AAV-BMP4 vectors could transduce myoblast C2C12 cells and produce osteogenic BMP4. In vivo study demonstrated that new bone formation could be induced by direct injection of AAV-BMP4 into the skeletal muscle of immunocompetent rats. Histological analysis revealed that the newly formed bone was induced through endochondral mechanism. Immunohistochemical staining further demonstrated that AAV-BMP4 gene delivery could mediate long-term transduction, and the involvement of BMP4 expression was responsible for the endochondral ossification. This study is, to our knowledge, the first report in the field of AAV-based BMP gene transfer and should be promising for clinical orthopaedic applications.