A limitation of successful stem cell gene transfer to hematopoietic stem cells is low transduction efficiency. To overcome this hurdle and develop a gene transfer strategy that might be clinically feasible, retroviral vectors containing a drug resistance gene were utilized to transduce human CD34(+)-enriched cells and select gene-modified cells by drug administration. We constructed a high-titer retroviral vector containing a fusion gene (F/S-EGFP) consisting of a mutated dihydrofolate reductase (DHFR) (Leu22-->Phe22, Phe31-->Ser31; F/S) gene and enhanced green fluorescent protein (EGFP) cDNA. To test whether the fusion gene could function as a selectable marker, transduced CD34(+) cells were assayed in long-term stromal co-cultures with and without addition of methotrexate (MTX). Without MTX exposure, the vector-transduced CD34(+) cells generated 22-50% EGFP(+) cobblestone area forming cells (CAFC) at week 5. By contrast, the vector-transduced cells cultured with MTX produced 96-100% EGFP(+) CAFC in four separate experiments. These are the first investigations to demonstrate selection for transduced long-term culture initiating cells using MTX. The DHFR/MTX system holds promise for improving selection of gene-transduced hematopoietic progenitor cells in vivo.