Mesenchymal stem cells (MSCs) hold promise for cell therapy, and implantation of MSCs engineered with a baculovirus transiently expressing the growth factor can augment the bone repair. To prolong the baculovirus-mediated transgene expression, we developed hybrid baculovirus vectors exploiting the FLP/Frt-mediated recombination for circular episome formation. Transduction of human MSCs with the hybrid baculovirus vectors harboring the osteoinductive bmp2 gene substantially extended the BMP2 expression and improved the cellular osteogenic differentiation. To confirm the potential in the clinical setting, the present study evaluated the biosafety profile of human MSCs engineered by the hybrid vectors. We unraveled that transduction of MSCs with the hybrid baculovirus vectors slightly impeded the cell proliferation after transduction, probably due to the perturbation of cellular gene expression and induction of innate responses. Nonetheless, the hybrid baculovirus vectors did not compromise the cell viability and cellular differentiation. No transgene integration into the host chromosome and disruption of the karyotype of the MSCs were observed. Additionally, no upregulation of proto-oncogenes or downregulation of tumor suppressor genes occurred in the MSCs transduced with the hybrid baculovirus vectors. Neither did the transduced MSCs induce tumor formation in nude mice. This study not only supported the safety of MSCs for cell therapy but also implicated the potential of the human MSCs engineered by the hybrid baculovirus vectors for their applications in clinical scenarios necessitating sustained transgene expression.