The transfer of genetic information between different cells and organisms, known as horizontal gene transfer (HGT), is one of the key mechanisms for acquiring new functions during the evolution of prokaryotic and eukaryotic genomes1. The mode and consequences of HGT are well established for prokaryotes and fungi2. Still, the evidence for cell-contact-dependent HGT between different cell types of mammalian cells that result in persistent changes remains scarce due to evolutionary barriers2. Here we report a pair of mammalian cell lines that engage in intercellular gene transfer in real-time at a very high frequency. We found the intercellular transfer of a fluorescent reporter gene occurs exclusively between the cell pair and requires an mRNA intermediate and reverse transcription. Robust gene transfer also requires direct cell–cell contact and is facilitated by a unique transient cell entrapment process forming an intercellular mosaic structure which requires ROCK kinase-dependent actin rearrangement in recipient cells. Our study reveals the existence of a novel mode of intercellular gene transfer in mammalian cells.