The current study evaluated the protective effects of anti-inflammatory cytokine gene transfer on osteolysis provoked by orthopedic biomaterial particles using a murine model of inflammatory bone loss. A section of bone was surgically implanted into an air pouch established on a syngeneic recipient mouse. Inflammation was provoked by introduction of ultra-high-molecular-weight polyethylene (UHMWPE) particles into the pouch, and retroviruses encoding for interleukin-1 receptor antagonist (hIL-1Ra), viral interleukin-10 (vIL-10), or LacZ genes were injected. Pouch fluid and tissue were harvested 7 days later for histological and molecular analyses. The results indicated that IL-1Ra or vIL-10 gene transfer significantly inhibited IL-1 and tumor necrosis factor (TNF) expression at both mRNA and protein levels. There were significantly lower mRNA expressions of calcitonin receptor and cathepsin K in RNA isolated from hIL-1Ra- or vIL-10-transduced pouches than LacZ-transduced and virus-free controls. Both anti-inflammatory cytokine gene transfers significantly reduced the mRNA expression of M-CSF (70–90%) and RANK (>65%) in comparison with LacZ- and virus-free controls. Histological examination showed that hIL-1Ra or vIL-10 gene transfer dramatically abolished UHMWPE-induced inflammatory cellular infiltration and bone pit erosion compared to LacZ-transduced and virus-free controls. Histochemical staining revealed significantly fewer osteoclast-like cells in samples treated with IL-1Ra or vIL-10 gene transfer. In addition, bone collagen content was markedly preserved in the groups with anti-inflammatory cytokine gene transfers compared with the other two groups. Overall, retrovirus-mediated hIL-1Ra or vIL-10 gene transfer effectively protected against UHMWPE-particle-induced bone resorption, probably due to the inhibition of IL-1/TNF-induced M-CSF production and the consequent osteoclast recruitment and maturation.