Localized gene delivery for repair of bone defects requires appropriate carriers for the gene therapy vectors. The objective of this study was to determine if hydrogels can control temporal and spatial delivery of adenovirus for localized gene therapy. Adenovirus expressing beta-galactosidase was suspended in liquid or fibrin or collagen gels of varied concentrations and incubated prior to testing its bioactivity. The bioactivity of the virus was determined by exposing fibroblasts to the medium, the gels, or the elution medium from the gels. Bioactivity of adenovirus suspended in medium or collagen decreased to half-maximal activity after 15 h of incubation. In contrast, virus suspended in fibrin exhibited a threefold extension of bioactivity and did not reach half-maximal activity for 45 h. Bioactivity of adenovirus in hydrogels was determined to be a function of the gel concentration. In vivo experiments involved intramuscular implantation of BMP-7-expressing adenovirus in collagen, fibrin, or liquid in nude mice for 1, 2, or 4 weeks. Bone formation was observed only after 4 weeks, with bone formation occurring in 80% of muscles implanted with fibrin or collagen and 50% of muscles implanted with liquid. Fibrin gel also led to significantly larger ossicles, indicating that fibrin may offer protection from loss of infectivity both in vivo and in vitro. These results demonstrated that hydrogels may be used as carriers to control delivery of the virus and resultant tissue regeneration.