The subject invention is related to a cell-mediated gene therapy treatment fororthopedic disease using a member belonging to the transforming growth factor-.beta. (TGF-.beta.) superfamily. TGF-.beta. gene therapy as a new treatmentmethod for degenerative arthritis is demonstrated. After transfection of TGF-.beta. cDNA expression vectors into fibroblasts (NIH 3T3-TGF-.beta.1), thecells were injected into rabbit achilles tendon and knee joints withartificially-made cartilage defects. Intratendinous injections were performedto determine the optimal concentration for in vivo expression. Partiallydefected cartilage model was made to simulate degenerative arthritis of theknee joint. The partial cartilage defect treated with the cell-mediated genetherapy procedure was covered by newly formed hyaline cartilage whichindicates that the cells survived and stimulated matrix formation in thisarea. Completely denuded cartilage areas were covered by fibrous collagen.