Skeletal gene therapy is an attractive new approach to the treatment of bone disorders. Impressive advances in our knowledge of the molecular genetic basis of skeletal disorders and fracture healing have led to the development of novel therapeutics based on ectopic expression of one or more genes in patient cells that can influence repair or regenerative processes in bone. Although still a relatively immature field, proof-of-principle for enhanced bone formation through skeletal gene therapy has already been established. The challenge now is to more precisely define optimal cellular targets and therapeutic genes, and to develop safe and efficient ways to deliver therapeutic genes to target cells. In this review, we will highlight some of the exciting advances that have been made in skeletal gene therapy in recent years, with a focus on treatment of localized skeletal lesions. Strengths and weaknesses of current approaches will be discussed, as will strategies for improved safety and therapeutic outcome in the future. Skeletal gene therapy can have an enormous impact on patient care. The next 5 years will present us with unparalleled opportunities to develop more effective therapeutic strategies and overcome obstacles presented by current gene transfer technologies.