Tendon rupture is a common injury. Inadequate endogenous repair often leaves patients symptomatic, with tendons susceptible to re-rupture. Administration of certain growth factors improves tendon healing in animal models, but their delivery remains a challenge. Here we evaluated the delivery of TGF-β1 to tendon defects by the implantation of genetically modified muscle grafts. Rat muscle biopsies were transduced with recombinant adenovirus encoding TGF-β1 and grafted onto surgically transected Achilles tendons in recipient animals. Tissue regenerates were compared to those of controls by biomechanical testing as well as histochemical and immunohistochemical analyses. Healing was greatly accelerated when genetically modified grafts were implanted into tendon defects, with the resulting repair tissue gaining nearly normal histological appearance as early as 2 weeks postoperatively. This was associated with decreased deposition of type III collagen in favour of large fibre bundles indicative of type I collagen. These differences in tendon composition coincided with accelerated restoration of mechanical strength. Tendon thickness increased in gene-treated animals at weeks 1 and 2, but by week 8 became significantly lower than that of controls suggesting accelerated remodelling. Thus localised TGF-β1 delivery via adenovirus-modified muscle grafts improved tendon healing in this rat model and holds promise for clinical application.