Anaplastic thyroid cancer (ATC) is the most aggressive malignancy of the thyroid, during which undifferentiated tumors arise from the thyroid follicular epithelium. ATC has a very poor prognosis due to its aggressive behavior and poor response to conventional therapies. Gene-directed enzyme/prodrug therapy using genetically engineered mesenchymal stromal cells (MSC) is a promising therapeutic strategy. The doxycycline (DOX)-controlled Tet inducible system is the most widely utilized regulatory system and could be a useful tool for therapeutic gene-based therapies. For example, use a synthetic “tetracycline-on” switch system to control the expression of the therapeutic gene thymidine kinase, which converts prodrugs to active drugs. The aim of this study was to develop therapeutic MSCs, harboring an inducible suicide gene, and to validate therapeutic gene expression using optical molecular imaging of ATC. We designed the Tet-On system using a retroviral vector expressing herpes simplex virus thymidine kinase (HSV1-sr39TK) with dual reporters (eGFP-Fluc2). Mouse bone marrow-derived mesenchymal stromal cells (BM-MSC) were transduced using this system with (MSC-Tet-TK/Fluc2) or without (MSC-TK/Fluc) the Tet-On system. Transduced cells were screened and characterized. Engineered MSCs were co-cultured with ATC (CAL62/Rluc) cells in the presence of the prodrug ganciclovir (GCV) and stimulated with DOX. The efficiency of cell killing monitored by assessing Rluc (CAL62/Rluc) and Fluc (MSC-Tet-TK/Fluc and MSC-TK/Fluc) activities using IVIS imaging. Fluc activity increased in MSC-Tet-TK/Fluc cells in a dose dependent manner following DOX treatment (R2 = 0.95), whereas no signal was observed in untreated cells. eGFP could also be visualized after induction with DOX, and the HSV1-TK protein could be detected by western blotting. In MSC-TK/Fluc cells, the Fluc activity increased with increasing cell number (R2 = 0.98), and eGFP could be visualized by fluorescence microscopy. The Fluc activity and cell viability of MSC-Tet-TK/Fluc and MSC-TK/Fluc cells decreased significantly following GCV treatment. A bystander effect of the therapeutic cells confirmed in co-cultures of CAL62 cells, an anaplastic thyroid cancer cell line, with either MSC-Tet-TK/Fluc cells or MSC-TK/Fluc cells. The Rluc activity in MSC-Tet-TK/Fluc co-cultures, derived from the CAL62/Rluc cells, decreased significantly with GCV treatment of DOX treated cultures, whereas no significant changes were observed in untreated cultures. In addition, the Fluc activity of MSC-Tet-TK/Fluc cells also decreased significantly with DOX treatment whereas no signal was present in untreated cultures. A bystander effect also be demonstrated in co-cultures with MSC-TK/Fluc cells and CAL62/Rluc; both the Rluc activity and the Fluc activity were significantly decreased following GCV treatment. We have successfully developed a Tet-On system of gene-directed enzyme/prodrug delivery using MSCs. We confirmed the therapeutic bystander effect in CAL62/Rluc cells with respect to MSC-Tet-TK/F...