Murine hepatocellular carcinoma cells were retrovirally transduced with the bacterial cytosine deaminase (CD) gene. CD-transduced cells exhibited more than 120-fold higher sensitivity to 5-fluorocytosine (5-FC) compared with parental cells. When syngeneic immunocompetent mice were inoculated s.c. with parental hepatocellular carcinoma cells containing as little as 5% CD-transduced cells, significant inhibition of tumor formation was induced by 5-FC treatment. Furthermore, established solid tumors in immunocompetent mice containing only 5% CD-transduced cells were infiltrated markedly with CD4- and CD8+ T lymphocytes and macrophages by 5-FC treatment, such that significant reduction or even complete regression of tumors was observed. These tumor-free mice resisted subsequent rechallenge with wild-type tumor. Conversely, when athymic nude mice were inoculated with a cell mixture containing CD-transduced cells and parental cells at a ratio of 40:60, all developed tumors despite 5-FC treatment. Our results indicate that gene therapy using the CD/5-FC system can induce efficient anti-tumor effects and protective immunity in immunocompetent mice but not in athymic immunodeficient mice, suggesting that the host's immunocompetence may be a critical factor for achieving successful gene therapy against cancer.