Gene delivery to neural cells is central to the development of transplantation therapies for neurological diseases. In this study, we used a baculovirus derived from the domesticated silk moth, Bombyx mori, as vector for transducing a human cell line (HEK293) and primary cultures of rat Schwann cells. Under optimal conditions of infection with a recombinant baculovirus containing the reporter green fluorescent protein gene under mammalian promoter control, the infected cells express the transgene with high efficiency. Toxicity assays and transcriptome analyses suggest that baculovirus infection is not cytotoxic and does not induce differential transcriptional responses in HEK293 cells. Infected Schwann cells retain their characteristic morphological and molecular phenotype as determined by immunocytochemistry for the marker proteins S-100, glial fibrillary acidic protein, and p75 nerve growth factor receptor. Moreover, baculovirus-infected Schwann cells are capable of differentiating in vitro and express the P0 myelination marker. However, transcripts for several immediate-early viral genes also accumulate in readily detectable levels in the transduced cells. This transcriptional activity raises concerns regarding the long-term safety of baculovirus vectors for gene therapy applications. Potential approaches for overcoming the identified problem are discussed.