To test the hypothesis that genetically modified bone marrow-derived endothelial progenitor cells (EPCs) can be effective carriers of therapeutic agents to tumor sites, we utilized our conditionally immortalized endothelial progenitor cell line, TR-BME-2. In the syngenic rat, systemically injected TR-BME-2 cells were immediately distributed to the organs (lung, bone marrow, peripheral blood, liver, spleen). Trapped cells were cleared within 4 days, but selective accumulation in the Walker256 tumor was maintained for over 4 days. The tumor growth was enhanced by administration of TR-BME-2 cells. It is suggested that accumulated TR-BME-2 differentiated to tumor vasculature, increased the tumor blood supply, and thereby increased the tumor volume. We conducted IL-12 gene transfection of TR-BME-2 cells with a virus vector in vitro, and used the resultant IL-12-secreting TR-BME-2 to deliver IL-12, which strongly activates cytotoxic lymphocytes and natural killer cells, to the tumor site in vivo. However, the tumor-progressive character of TR-BME-2 offset the anti-tumor effect of IL-12. Nevertheless, our results suggest that gene-transfected EPCs could be useful as a tumor-specific drug delivery system, especially if the tumor vasculature-promoting effect of EPCs can be blocked.