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Many clinical conditions require regeneration or implantation of bone. This is one focus shared by neurosurgery and orthopedics. Current therapeutic options (bone grafting and protein-based therapy) do not provide satisfying solutions to the problem of massive bone defects. In the past few years, gene- and stem cell-based therapy has been extensively studied to achieve a viable alternative to current solutions offered by modern medicine for bone-loss repair. The use of adult stem cells for bone regeneration has gained much focus. This unique population of multipotential cells has been isolated from various sources, including bone marrow, adipose, and muscle tissues. Genetic engineering of adult stem cells with potent osteogenic genes has led to fracture repair and rapid bone formation in vivo. It is hypothesized that these genetically modified cells exert both an autocrine and a paracrine effects on host stem cells, leading to an enhanced osteogenic effect. The use of direct gene delivery has also shown much promise for in vivo bone repair. Several viral and nonviral methods have been used to achieve substantial bone tissue formation in various sites in animal models. To advance these platforms to the clinical setting, it will be mandatory to overcome specific hurdles, such as control over transgene expression, viral vector toxicity, and prolonged culture periods of therapeutic stem cells. This review covers a prospect of cell and gene therapy for bone repair as well as some very recent advancements in stem cell isolation, genetic engineering, and exogenous control of transgene expression.