Human carcinoembryonic antigen (CEA) is overexpressed in most colorectal cancers and has been widely used as a clinical marker for the management of colon cancer patients. The transcriptional regulatory elements (TREs) of CEA include two enhancer elements and a promoter in the 5'-flanking region of the CEA gene. By using these elements in different combinations to control reporter gene expression and the replication of adenovirus variants in various tumor cells, we have identified an optimal CEA regulatory cassette that tightly controls gene expression and viral replication in CEA-producing colon cancer cells. One of these variants, OV798, in which this regulatory cassette controls E1A expression, was further characterized. OV798 preferentially replicates in and kills CEA-producing colorectal cancer cell lines such as LoVo and SW1463, but its replication is attenuated by 1000-fold in the CEA-negative cell lines Colo-320DM (colon cancer), PA-1 (ovarian cancer), G361 (melanoma), U118 MG (glioma), and HBL-100 (human breast epithelial cell). The antitumor activity of OV798 was further examined in BALB/c nu/nu mice carrying s.c. human colon tumor xenografts. A single intratumoral administration of OV798 resulted in growth inhibition of human LoVo colon cancer xenografts. Six weeks after treatment, relative tumor volume decreased to 90% of baseline for the OV798 treatment group, compared to an increase to 1200% of baseline at 4 weeks for the vehicle-treated group. In vitro and in vivo characterization indicate that OV798 could be used as a therapy for human colon cancer.