Skin substitutes, containing cultured keratinocytes of the epidermis (autologous or allogeneic cells), have been used in the treatment of severe burns and other defects of the skin such as chronic ulcers. Our goal is to enhance the functions of the cells used in these skin substitutes by genetic modification. We propose to develop a genetically modified skin graft which would function as a cell-based vehicle for the local synthesis and delivery of wound-healing growth factors. Using retroviral-mediated gene transfer, we have introduced stable copies of the genes encoding platelet-derived growth factor (PDGF-A) or insulin-like growth factor-1 (IGF-1) into cultured human diploid keratinocytes. After stable integration of these genes, the cells secreted significant levels of these growth factors, 744 ng and 502 ng/10(7) cells/24 h for PDGF-A and IGF-1, respectively. The modified cells were grown to confluence, detached as a multicell-layered epithelial sheet, and transplanted to athymic mice. Seven days after transplantation, grafts secreting PDGF-A or IGF-1 differentiated into a stratified epithelium comparable to unmodified cells. Most importantly, the newly synthesized connective tissue layer subjacent to the PDGF-A-modified grafts was significantly thicker and showed an increase in cellularity, vascularity, type I collagen, and fibronectin deposition when compared to control grafts of unmodified cells or grafts expressing IGF-1. These results demonstrated that the function of the cells of a skin substitute can be enhanced by genetic modification and show that PDGF-A secretion from these cells can mediate changes to the cellular, vascular, and extracellular matrix composition of the adjacent dermal tissue. Moreover, these results suggest that a cell-based method for growth factor synthesis and delivery may be a useful approach to promoting tissue repair.