Both AIDS and cancer are linked to immune dysfunctions of the body which are characterized by the persistence of disease-afflicted cells. To effect a cure with novel gene therapy approaches, these diseased cells must be eliminated either directly or indirectly using cytotoxic or suicide genes, or via activation of specific immune functional cells. Retroviral vectors are useful tools for long-term genome modification owing to their ability to integrate into host chromosomes. However, most oncoretroviruses, including murine leukemia virus (MLV), require cell division to facilitate nuclear entry; this has restricted the application of murine oncoretroviral vectors to cell targets that are actively dividing. Accordingly, gene transfer into hematopoietic stem cells (HSCs) and terminally differentiated cells such as muscles, neurons and dendritic cells (DCs) has been limited with the conventional oncoretroviral vectors. The lentiviral family of retroviruses, including human immunodeficiency virus type 1 (HIV-1), has been developed into useful gene transfer tools. Lentiviral vectors carry several nuclear entry viral proteins, and therefore can target slowly-dividing and non-dividing cells. To activate immune response against cancer or HIV infection, long-term marking of the target cells is not necessary. However, to establish intracellular defense to prevent HIV infection, prolonged genetic modification of target cells such as HSCs will be required. Due to the poor transduction efficiency and the problem of transgene silencing over time with oncoretroviral vectors, most gene therapy studies for AIDS and cancer using oncoretroviral vectors remain proof-of-concept studies. Here we will discuss recent developments in the use of retroviral vectors, including HIV-1-derived lentiviral vectors, for the treatment of AIDS and cancer, and their future therapeutic potential.