Baculovirus is a promising gene delivery vector but its widespread application is impeded as it only mediates transient transgene expression in mammalian cells. To prolong the expression, we developed a dual baculovirus system whereby one baculovirus expressed FLP recombinase while the other harbored an Frt-flanking cassette encompassing the transgene and oriP/EBNA1 derived from Epstein-Barr virus. After cotransduction of cells, the expressed FLP cleaved the Frt-flanking cassette off the baculovirus genome and catalyzed circular episome formation, then oriP/EBNA1 within the cassette enabled the self-replication of episomes. The excision/recombination efficiency was remarkably enhanced by sodium butyrate, reaching 75% in human embryonic kidney-293 (HEK293) cells, 85% in baby-hamster kidney (BHK) cells, 77% in primary chondrocytes, and 48% in mesenchymal stem cells (MSCs). The hybrid baculovirus substantially prolonged the transgene expression to approximately 48 days without selection and >63 days with selection, thanks to the maintenance of replicons and transgene transcription. In contrast to the replicating episomes, the baculovirus genome was rapidly degraded. Furthermore, an osteoinductive growth factor gene was efficiently delivered into MSCs using this system, which not only prolonged the growth factor expression but also potentiated the osteogenesis of MSCs. These data collectively implicate the potential of this hybrid baculovirus system in gene therapy applications necessitating sustained transgene expression.