Natural bone growth greatly depends on the precedent vascular network that supplies oxygen and essential nutrients and removes metabolites. Likewise, it is crucial for tissue-engineered bone to establish a vascular network that temporally precedes new bone formation, and spatially originates from within the graft. In order to recapitulate physiological skeletal development, we have developed a complex bone graft to repair rat bone defects. We have demonstrated that endothelial cells and osteoblasts (identified by cell morphology, quantification of specific marker antigens, calcium deposition and capillary-like growth) were able to differentiate and expand from donor rat bone marrow mononuclear cell populations. The biocompatibilities of poly-epsilon-caprolactone (PCL)-hydroxyapatite (HA) composites used for graft fabrication were evaluated at different component ratios to identify the optimal and support of cellular viability and functions for endothelial cells and osteoblasts. Using point-injection and low-pressure techniques, seeded endothelial cells and osteoblasts were able to assemble into microvascular networks and form bony matrix in grafts. The exogenous origination of these cells and their contribution to the vascularization and osteogenesis was confirmed using sex-mismatch implantation and Y chromosome tracking. By pre-seeding with endothelial cells, the resulting vascularization was able to promote osteogenesis, prevent ischemic necrosis and improve the mechanical properties in engineered bone tissue. Taken together, the results indicated that the integration of complex cell populations with composite scaffold materials provided an effective technique to improve osteogenesis in engineered bone graft. These findings suggest that hybrid grafts have great potential for clinical use to treat large bone defects.