Stimulating angiogenesis by gene transfer approaches offers the hope of treating tissue ischemia which is untreatable by currently practiced techniques of vessel grafting and bypass surgery. Vascular endothelial growth factor (VEGF) and basic fibroblast growth factor (FGF-2) are potent angiogenic molecules, making them ideal candidates for novel gene transfer protocols designed to promote new blood vessel growth. In this study, an ex vivo gene therapy approach utilizing cell encapsulation was employed to deliver VEGF and FGF-2 in a continuous and localized manner. C(2)C(12) myoblasts were genetically engineered to secrete VEGF(121), VEGF(165) and FGF-2. These cell lines were encapsulated in hollow microporous polymer membranes for transplantation in vivo. Therapeutic efficacy was evaluated in a model of acute skin flap ischemia. Capsules were positioned under the distal, ischemic region of the flap. Control flaps showed 50% necrosis at 1 week. Capsules releasing either form of VEGF had no effect on flap survival, but induced a modest increase in distal vascular supply. Delivery of FGF-2 significantly improved flap survival, reducing necrosis to 34.2% (P < 0.001). Flap vascularization was significantly increased by FGF-2 (P < 0.01), with numerous vessels, many of which had a large lumen diameter, growing in the proximity of the implanted capsules. These results demonstrate that FGF-2, delivered from encapsulated cells, is more efficacious than either VEGF(121) or VEGF(165) in treating acute skin ischemia and improving skin flap survival. Furthermore, these data attest to the applicability of cell encapsulation for the delivery of angiogenic factors for the treatment and prevention of tissue ischemia.