The transplantation of genetically engineered cells faces limitations associated with host immunity. Allogeneic cells are typically rejected in response to inherent histo-incompatibility. Even autologous cells can induce an immune response toward antigenic molecules expressed following transfer of foreign genes. The goal of the present study was to investigate the ability of immunomodulating molecules co-expressed with biotherapeutic factors to overcome these limitations both in syngeneic and allogeneic cell transplantation. The C(2)C(12) mouse myoblast cell line was engineered to express CTLA4Ig, a soluble factor blocking T cell costimulation, in conjunction with erythropoietin (Epo), a reporter biotherapeutic protein. In syngeneic C3H mice, myoblasts expressing only mouse Epo were mostly rejected within 2 weeks, as indicated by the transient increase in host hematocrit. In allogeneic recipients, the same cells induced only a 1-week increase in the hematocrit reflecting an acute rejection process. CTLA4Ig expression significantly extended the survival of mouse Epo-secreting myoblasts in approximately half of syngeneic hosts, whereas it led only to a 1-week improvement effect in allogeneic recipients. When combined with a transient anti-CD154 treatment, CTLA4Ig expression prevented Epo-secreting C(2)C(12)myoblasts from being rejected in allogeneic DBA/2J recipients for at least 1 month. In contrast, the same anti-CD154 treatment alone induced only a 1 week improvement. These results demonstrate that CTLA4Ig co-expression associated with a transient anti-CD154 treatment can prolong the delivery of recombinant proteins via transfer of ex vivo modified cells in allogeneic recipients.