The Moloney murine leukemia retrovirus-derived vector N2 was used to transfer the bacterial NeoR gene (conferring resistance to the neomycin analogue G418) into hematopoietic progenitor cells. Approximately 5% of day seven CFU-GM were resistant to 2,000 micrograms/ml G418, using a supernatant infection protocol in the absence of vector-producing cells. A greater proportion of CFU-GM colonies were recovered relative to uninfected controls as the stringency of selection was diminished. Enzyme activity was detected in drug-resistant colonies, confirming that the resistant colonies obtained after infection with N2 represented cells producing neomycin phosphotransferase. Activity in the CFU-GM colonies approached 50% of that of drug-resistant vector- producing cells on a per cell basis. To test the hypothesis that more rapidly cycling bone marrow cells would be more susceptible to vector infection, we treated progenitor cells obtained from cyclic hematopoietic (CH) dogs with the N2 vector. Despite the increased numbers of hematopoietic progenitor cells obtained from CH dogs, the proportion of G418-resistant CFU-GM did not increase over that obtained with N2-infected normal marrow. These results demonstrate that retroviral vectors can be used to transfer and express exogenous genes in canine hematopoietic progenitor cells.