Adeno-associated virus (AAV) vectors are potentially useful for gene therapy of a number of human diseases. However, the use of these vectors has been limited by the lack of stable vector-packaging cell lines. The difficulties in developing packaging cell lines relate to low levels of rep gene expression from the AAV-p5 promoter, and to the propensity of Rep proteins to suppress continued growth of immortalized cell lines. We describe here two new techniques which allow these problems to be circumvented. First, we have demonstrated that expression of rep from the human immunodeficiency virus (HIV) long terminal repeat (LTR) promoter results in a 10-fold improvement of packaging efficiency. Second, we have overcome the inefficiency of vector plasmid transfection by generating cell populations containing rescuable AAV recombinant genomes. These improvements yielded a net increase of 50-fold in the packaging efficiency of the AAVp5neo and AAVp5lacZ recombinant vectors. The AAVp5lacZ vector packaged with this method was administered systemically to recently weaned C57BL mice, and mediated efficient expression of the beta-galactosidase reporter gene in cells of the airway epithelium and spleen. This indicates the in vivo activity of these vector stocks, and their potential utility for gene therapy.