Craniofacial anomalies, bone defects and cartilage lesions pose a difficult and challenging problem for both the doctor and for patients and their families. Conventional therapies focus on orthopaedic surgery, grafting with autogenous bone, allogenic bone grafts, or distraction osteogenesis. However, the efficacy of these techniques is limited by high cost, donor morbidity, scarcity of tissue resources, and alterations in volume [Marx & Morales, 1988]. On the basis of recent insights into the development, growth, and adaptation of bone, together with the significant advances in recombinant DNA technology, gene therapy is increasingly becoming recognised as an alternative technique for augmenting and promoting bone regeneration in vivo. It can be applied in craniofacial skeletal tissues by transferring genes encoding for specific growth factors such as BMPs in osteoblasts, chondrocytes or progenitor cells for the purpose of enhancing protein production [Scaduto & Lieberman, 1999]. It can be performed by either direct administration of gene delivery vectors, or by transplantation of genetically modified cells. This review will focus on recent advances in molecular mechanisms of bone formation, and development in various viral and non-viral vectors for direct in vivo therapeutic gene transfer and genetically engineered cells ex vivo therapy.