Although vascular endothelial growth factor (VEGF) has been shown to act synergistically with bone morphogenetic protein (BMP)2 and BMP4 to promote ectopic endochondral bone formation via cell-based BMP gene therapy, the optimal ratio of VEGF to either of the BMPs required to obtain this beneficial effect remains unclear. In the current study, two cell types (C2C12, NIH/3T3) were retrovirally transduced to express BMP4 only or both BMP4 and VEGF. The resulting groups of cells were tested for their cellular proliferation, in vitro mineralization capacity, survival potential, and ability to undergo ectopic bone formation when implanted into a gluteofemoral muscle pocket created in severe combined immunodeficient mice. Results showed that VEGF inhibited the in vitro calcification of C2C12 and NIH/3T3 cells transduced to express BMP4. In vivo, C2C12 and NIH/3T3 cells expressing BMP4 and VEGF displayed significantly less bone formation than the same cells expressing only BMP4. In vivo, our results indicated that, when the ratio of VEGF to BMP4 is high, a detrimental effect on ectopic bone formation is observed; however, when the ratio is kept low and constant over time, the detrimental effect that VEGF has on ectopic bone formation is lost. Our studies revealed that VEGF's synergistic role in BMP4 induced ectopic bone formation is dose and cell-type dependent, which is an important consideration for cell-based gene therapy and tissue engineering for bone healing.