Retroviral gene transfer into murine hematopoietic progenitors of the human O6alkylguanine-DNA alkyltransferase cDNA, methylguanine methyltransferase (MGMT) has been shown to result in MGMT expression, increased alkyltransferase (AGT) activity, and resistance to 1,3-bis-(2-chloroethyl) nitrosourea (BCNU) both in vitro and in vivo. In the present study we show that MGMT expressing bone marrow (BM) progenitors can be selected for in vivo by BCNU administration. MGMT+ mice treated with multiple doses of BCNU and examined 13 to 17 weeks after transplantation displayed a 2.4-fold increase in the percentage of progenitors with evidence of proviral integration (p < 0.0001). Likewise, percentage of the BCNU IC50 in these progenitors was 1.8-fold higher than that observed in progenitors of MGMT+ mice not treated with BCNU (p = 0.0027) and 3.6-fold higher than in mock-transduced progenitors (p < 0.001). AGT expression in myeloid cells was 3.8-fold higher in mice treated with BCNU than in untreated mice (p = 0.0378) and 64-fold higher than endogenous AGT levels. These findings demonstrate that after transplantation with MGMT-transduced BM cells, BCNU treatment enriches for MGMT+ cells, resulting in an increase in MGMT expression and AGT activity in vivo. This approach may be used to enrich for transduced hematopoietic cells in patients after clinical transplantation, to decrease myelosuppression after repeated nitrosourea exposure, and to increase the proportion of genetically altered hematopoietic cells.