Bone marrow-derived mesenchymal stem cells (MSCs) are a promising platform for cell- and gene-based treatment of inherited and acquired disorders. We recently showed that human MSCs distribute widely in a murine xenotransplantation model. In the current study, we have determined the distribution, persistence, and ability of lentivirally transduced human MSCs to express therapeutic levels of enzyme in a xenotransplantation model of human disease (nonobese diabetic severe combined immunodeficient mucopolysaccharidosis type VII [NOD-SCID MPSVII]). Primary human bone marrow-derived MSCs were transduced ex vivo with a lentiviral vector expressing either enhanced green fluorescent protein or the lysosomal enzyme beta-glucuronidase (MSCs-GUSB). Lentiviral transduction did not affect any in vitro parameters of MSC function or potency. One million cells from each population were transplanted intraperitoneally into separate groups of neonatal NOD-SCID MPSVII mice. Transduced MSCs persisted in the animals that underwent transplantation, and comparable numbers of donor MSCs were detected at 2 and 4 months after transplantation in multiple organs. MSCs-GUSB expressed therapeutic levels of protein in the recipients, raising circulating serum levels of GUSB to nearly 40% of normal. This level of circulating enzyme was sufficient to normalize the secondary elevation of other lysosomal enzymes and reduce lysosomal distention in several tissues. In addition, at least one physiologic marker of disease, retinal function, was normalized following transplantation of MSCs-GUSB. These data provide evidence that transduced human MSCs retain their normal trafficking ability in vivo and persist for at least 4 months, delivering therapeutic levels of protein in an authentic xenotransplantation model of human disease.