Hematopoietic stem cells (HSCs) lose marrow reconstitution potential during ex vivo culture. HSC migration to stromal cell–derived factor (SDF)-1 (CXCL12) correlates with CXC chemokine receptor 4 (CXCR4) expression and marrow engraftment. We demonstrate that mobilized human CD34+ peripheral blood stem cells (CD34+ PBSCs) lose CXCR4 expression during prolonged culture. We transduced CD34+ PBSCs with retrovirus vector encoding human CXCR4 and achieved 18-fold more CXCR4 expression in over 87% of CD34+ cells. CXCR4-transduced cells yielded increased calcium flux and up to a 10-fold increase in migration to SDF-1. Six-day cultured CXCR4-transduced cells demonstrated significant engraftment in nonobese diabetic/severe combined immunodeficient mice under conditions in which control transduced cells resulted in low or no engraftment. We conclude that transduction-mediated overexpression of CXCR4 significantly improves marrow engraftment of cultured PBSCs.