Gene modification of cells prior to their transplantation, especially stem cells, enhances their survival and increases their function in cell therapy. Like the Trojan horse, the gene-modified cell has to gain entrance inside the host's walls and survive and deliver its transgene products. Using cellular, molecular and gene manipulation techniques the transplanted cell can be protected in a hostile environment from immune rejection, inflammation, hypoxia and apoptosis. Genetic engineering to modify cells involves constructing modules of functional gene sequences. They can be simple reporter genes or complex cassettes with gene switches, cell specific promoters and multiple transgenes. We discuss methods to deliver and construct gene cassettes with viral and non-viral delivery, siRNA, and conditional Cre/Lox P. We review the current uses of gene-modified stem cells in cardiovascular disease, diabetes, neurological diseases, (including Parkinson's, Alzheimer's and spinal cord injury repair), bone defects, hemophilia, and cancer.