We recently reported that systemic administration of peripheral blood (PB) CD34+ cells, an endothelial progenitor cell (EPC)-enriched population, contributed to fracture healing via vasculogenesis/angiogenesis. However, pathophysiological role of EPCs in fracture healing process has not been fully clarified. Therefore, we investigated the hypothesis whether mobilization and incorporation of bone marrow (BM)-derived EPCs may play a pivotal role in appropriate fracture healing. Serial examinations of Laser doppler perfusion imaging and histological capillary density revealed that neovascularization activity at the fracture site peaked at day 7 post-fracture, the early phase of endochondral ossifification. Fluorescence-activated cell sorting (FACS) analysis demonstrated that the frequency of BM cKit+Sca1+Lineage− (Lin−) cells and PB Sca1+Lin− cells, which are EPC-enriched fractions, significantly increased post-fracture. The Sca1+ EPC-derived vasuculogenesis at the fracture site was confirmed by double immunohistochemistry for CD31 and Sca1. BM transplantation from transgenic donors expressing LacZ transcriptionally regulated by endothelial cell-specific Tie-2 promoter into wild type also provided direct evidence that EPCs contributing to enhanced neovascularization at the fracture site were specifically derived from BM. Animal model of systemic administration of PB Sca1+Lin− Green Fluorescent Protein (GFP)+ cells further confirmed incorporation of the mobilized EPCs into the fracture site for fracture healing. These findings indicate that fracture may induce mobilization of EPCs from BM to PB and recruitment of the mobilized EPCs into fracture sites, thereby augment neovascularization during the process of bone healing. EPCs may play an essential role in fracture healing by promoting a favorable environment through neovascularization in damaged skeletal tissue. J. Cell. Physiol. 215: 234–242, 2008. © 2008 Wiley-Liss, Inc.