Tissue engineering has become a new approach for repairing bone defects. Previous studies indicated that coral scaffolds had been utilized with bone marrow stromal cells (BMSCs) in a variety of approaches for bony reconstruction. In these applications, the degradation rate of the material did not match the rate at which bone was regenerated. In this study, a previously established 30 mm long mandibular segmental defect was repaired with engineered bone using green fluorescent protein-labeled osteogenic BMSCs seeded on porous coral (n = 12). Defects treated with coral alone (n = 12) were used as an experimental control. In the BMSCs/coral group, new bone formation was observed from 4 weeks postoperation, and bony-union was achieved after 32 postoperative weeks. The residual coral volume of the BMSCs/coral grafts at 12 weeks (20-30%) was significantly higher than that at 32 weeks (10-15%, p < 0.05), which was detected by microcomputed tomography and histological examination. The engineered bone with BMSCs/coral achieved satisfactory biomechanical properties at 32 weeks postoperation, which was very close to that of the contralateral edentulous mandible. More importantly, immunostaining demonstrated that the implanted BMSCs differentiated into osteoblast-like cells. In contrast, minimal bone formation with almost solely fibrous connection was observed in the group treated with coral alone. Based on these results, we conclude that engineered bone from osteogenically induced BMSCs and biodegradable coral can successfully repair the critical-sized segmental mandibular defects in canines and the seeding cells could be used for bony restoration.