Generation of axially vascularized muscle tissue constitutes a promising new approach to restoration of damaged muscle tissue. Mesenchymal stemcells (MSC), with their ability to be expanded to large cell numbers without losing their differentiation capacity into the myogenic lineage, could offer a promising cell source to generate neomuscle tissue. In vitro experiments showed that cocultures of primary myoblasts and MSC undergo myogenic differentiation by stimulation with bFGF and dexamethasone. A newly developed AV-Loop model with neurotization was established in this study. It encompasses axial vascularization and the additional implantation of a motor nerve serving as myogenic stimulator. Myoblasts and MSCs were coimplantated in a prevascularized isolation chamber. Cells were differentiated by addition of bFGF and dexamethasone plus implantation of a motor nerve. After 8 weeks, we could observe areas of myogenic differentiation with α -sarcomeric actin and MHC expression in the constructs. Quantitative PCR analysis showed an expression of myogenic markers in all specimens. Thus, neurotization and addition of bFGF and dexamethasone allow myogenic differentiation of MSC in an axially vascularized in vivo model for the first time. These findings are a new step towards clinical applicability of skeletal muscle tissue engineering and display its potential for regenerative medicine.