Objective: To investigate the effect of magnetic-induced cell targeted transplantation (MagIC-TT) on repair of bone defects in mice using therapeutic fluorescent gene labeled cells into bone tissue and its mechanism. Methods: The proliferation, apoptosis and targeted migration ability were compared between magnetized and unmagnetized murine bone marrow stromal cells labeled with green fluorescent protein (GFP-BMSCs) (n=3). GFP-BMSCs were loaded into tissue engineering bone (TEB) by MagIC-TT in the experimental group (n=5) before the TEB was transplanted into the large femur defects in the model of red fluorescent protein (RFP) transgenic mice. In the control group (n=5) TEB was not loaded with GFP-BMSCs while in the blank group (n=3) the large femur defects were only fixated with intramedullary nails. The effects and mechanism of bone repair were explored 3 months after surgery using X-ray, micro-CT, semi-solid decalcification (SSD) and histology, respectively Results: There were no significant differences between magnetized and non-magnetized GFP-BMSCs in proliferation (0.760±0.029 versus 0.733±0.033) or in survival rate (87.9%±1.0% versus 87.4%±2.0%) (P>0.05), but the mobility of magnetized GFP-BMSCs was significantly higher than that of non-magnetized GFP-BMSCs (P<0.05). The X-ray 3 months after surgery showed that the scaffolds in the experimental group were degraded and that the proximal and distal ends of the femoral defects were connected by new bone tissue. No new bone formation was found in the blank group while a small amount of bone formation was observed in the control group. The Micro-CT showed that stable new bone tissue formed in the femur defects after removal of intramedullary nails in the experimental group. The SSD showed that GFP-MSCs were densely distributed in the scaffolds with red fluorescent protein (RFP) recipient cells penetrating them, indicating involvement of both donor and recipient cells in the formation of new bone. Conclusions MagIC-TT can be used to promote introduction of therapeutic cells into bone tissue to achieve a fine effect on repairing bone defects. Dual fluorescence gene marking combined with SSD shows that both donor and recipient cells may take part in the bone repairing.