Neovascularization has a critical role in the growth and metastatic spread of tumors, and involves recruitment of circulating endothelial progenitor cells (EPCs) from bone marrow. In this study, we examined whether EPCs could promote tumor angiogenesis, and found that the tumor growth was enhanced by the administration of EPCs. To test the hypothesis that genetically modified bone marrow-derived EPCs can be effective carriers of therapeutic agents to tumor sites, we conducted human interferon-beta (HuIFN-β) gene transfection of EPCs with a virus vector in vitro. When HuIFN-β was applied in the ex vivo culture of EPCs, HuIFN-β-transduced EPCs achieved efficient killing of the total population of SPC-A1 cells, indicating a bystander effect was elicited by HuIFN-β-transduced EPCs in vitro. When SCP-A1 cancer cells were coimplanted along with ex vivo cultivated EPCs subcutaneous injection in nude mice, the tumor growth was increased. However, the anti-tumor effect of interferon-beta (IFN-β) offset the tumor-progressive character of EPCs and the tumor growth, and the vascular density of tumor tissues increased by coimplanted EPCs were decreased upon IFN-β treatment. In addition, overall expression levels of vascular endothelial growth factor in tumor tissues were decreased upon IFN-β treatment. Therefore, our results suggest that gene-transfected EPCs could be useful as a tumor-specific drug delivery system.