Natural attenuation of ALVAC virus in mammals makes it an attractive vector for cancer vaccine therapy of immunocompromised hosts, such as patients with lymphoid malignancies. However, the transduction efficiency of ALVAC constructs in lymphoid tumors has not yet been characterized. We studied a wide spectrum of human T- and B-cell leukemia and lymphomas and found significant heterogeneity of the ALVAC-mediated gene product expression in these tumors. While ALVAC-B7.1, ALVAC-B7.2, or ALVAC-luciferase vectors effectively expressed recombinant genes in malignancies arising from T- or early B-cell precursors, negative or low expression of ALVAC recombinant genes occurred in tumors arising from mature B-cells. We showed that ALVAC-encoded B7.1 or B7.2 was continuously expressed on the infected, and subsequently irradiated, leukemia cells, and only cells with ALVAC-mediated expression of costimulatory molecules (but not unmodified leukemia cells or those infected with the ALVAC-parental vector) induced significant proliferation and IFN-gamma production by alloreactive T-cells. These data provide the rationale for clinical studies using the ALVAC vector system for gene transfer into lymphoid tumors of T- and early B-cell origin to render them more immunogenic, while alternative strategies should be considered for immunotherapy of mature B-cell malignancies.