Angiogenesis is essential in bone fracture healing for restoring blood flow to the fracture site. Vascular endothelial growth factor (VEGF) and its receptor have been implicated in this process. Despite the importance of angiogenesis for the healing processes of damaged bones, the role of VEGF signaling in modulation of osteogenic differentiation in human mesenchymal stem cells has not been investigated in great detail. We examined the expression of VEGF-A and VEGFR-1 in human adult mesenchymal stem cells derived from trabecular bone (hTBCs). VEGF-A was found to be secreted in a differentiation dependent manner during osteogenesis. Transcripts for VEGF-A were also seen to be elevated during osteogenesis. In addition, transcripts for VEGF-A and the corresponding receptor VEGFR-1 were upregulated under hypoxic conditions in undifferentiated hTBCs. To investigate the signaling of VEGF-A on osteogenesis recombinant hTBCs were generated. High expression of VEGF-A stimulated mineralization, whereas high expression of sFLT-1, an antagonist to VEGF-A, reduced mineralization suggesting that VEGF-A acts as autocrine factor for osteoblast differentiation. In addition, VEGF-A secreted by hTBCs promotes sprouting of endothelial cells (HUVE) demonstrating a paracrine role in blood vessel formation. In summary, an in vitro analysis of transgene effects on cellular behavior can be used to predict an effective ex vivo gene therapy. © 2005 Wiley-Liss, Inc.