In vivo studies using bone marrow-derived mesenchymal stem cells are still uncommon. Applications for bone defect replacement in undesirable clinical circumstances such as large defects, bacterial or other pathogen-contaminated fields, and irradiated surgical wound bed necessitate vascularized bone regeneration. Use of a fascial flap including regenerated bone would be a very powerful tool for treatment. It would be especially beneficial in cases where normal bone regeneration is not expected due to a lack of sufficient blood supply, extensive surgical scarring, or bacterial contamination. In this study, we used nude rats in which the superficial epigastric flap of the experimental group was used to wrap around a mixture of human mesenchymal stem cells, bone morphogenetic protein-2, and basic fibroblast growth factor cytokines in a gelatin carrier. These rats showed significantly higher bone mineral density at 4 weeks compared to the other experimental groups containing phosphate buffered saline, human mesenchymal stem cells alone, or the two cytokines alone (p < 0.01). There were no remarkable histologic differences up to 7 days. At 2 weeks, more progressive vascularity and perivascular tissue deposits were seen in the experimental group. Basophilic mineral structure surrounded the fibroblast-like mesenchymal stem cells at 4 weeks, presumably osteoblastic or osteoclastic cell lining. Bone marker immunohistochemistry against alkaline phosphatase and osteocalcin revealed diffuse and distinct immunoreactivity in osteoblastic cells in the experimental group at 4 weeks. Further transcriptional expression of polyomavirus enhancer binding protein 2alphaA suggested that the human transplanted cells proceeded to osteogenic lineage in 4 weeks. These results may be useful as a new approach for bone regeneration.