A novel murine system was developed to study the in vivo localization of xenotransplanted human cells and assess their therapeutic effect in an authentic model of disease. The beta-glucuronidase (GUSB) mutation of the mucopolysaccharidosis type VII (MPSVII) mouse was backcrossed onto the nonobese diabetic/severe combined immunodeficient (NOD/SCID) xenotransplantation strain. The resulting NOD/SCID/MPSVII mice displayed the characteristic features of lysosomal storage disease because of GUSB deficiency and were also capable of engrafting human cells. Human CD34+ hematopoietic progenitor cells from healthy, GUSB+ donors engrafted NOD/SCID/MPSVII mice in a manner similar to that of standard NOD/SCID mice. Six to 12 weeks following transplantation, 1% to 86% of the host bone marrow was positive for human CD45. By using a GUSB-specific histochemical assay, human engraftment was detected with single-cell sensitivity not only in well-characterized hematopoietic tissues like bone marrow, spleen, lymph node, and thymus, but also in other nonhematopoietic organs like liver, kidney, lung, heart, brain, and eye. Quantitative measurements of GUSB activity confirmed this expansive tissue distribution. The GUSB-specific assays were validated for their accuracy in identifying human cells through colocalization of human CD45 expression with GUSB activity in tissues of mice receiving transplants. An analysis of the therapeutic effects of engrafted human cells revealed a reduction of pathologic storage material in host organs, including the bone, spleen, and liver. Such xenotransplantation experiments in the NOD/SCID/MPSVII mouse represent a powerful approach to both study the in vivo biology of human cells and gather preclinical data regarding treatment approaches for a human disease.