The management of segmental bone defects presents a complex reconstruction challenge for orthopedic surgeons. Current treatment options are limited by efficacy across the spectrum of injury, morbidity, and cost. Regional gene therapy is a promising tissue engineering strategy for bone repair, as it allows for local implantation of nucleic acids or genetically modified cells to direct specific protein expression. In cell-based gene therapy approaches, a variety of different cell types have been described including mesenchymal stem cells (MSCs) derived from multiple sources-bone marrow, adipose, skeletal muscle, and umbilical cord tissue, among others. MSCs, in particular, have been well studied, as they serve as a source of osteoprogenitor cells in addition to providing a vehicle for transgene delivery. Furthermore, MSCs possess immunomodulatory properties, which may support the development of an allogeneic "off-the-shelf" gene therapy product. Identifying an optimal cell type is paramount to the successful clinical translation of cell-based gene therapy approaches. Here, we review current strategies for the management of segmental bone loss in orthopedic surgery, including bone grafting, bone graft substitutes, and operative techniques. We also highlight regional gene therapy as a tissue engineering strategy for bone repair, with a focus on cell types and cell sources suitable for this application.