Engraftment of tissue-engineered bone plays a pivotal role in the treatment of large bone defects. However, promoting thorough vascularization in the central area of tissue-engineered constructs remains a great challenge for clinical application. Here, we developed a three-dimensional (3D) co-culture system using biphasic calcium phosphate bioceramic (BCPB) scaffold seeded with rabbit peripheral blood-derived mesenchymal stem cells (PB-MSCs) and endothelial progenitor cells (EPCs) to improve new bone formation and vascularization for long bone segmental defects. In vitro studies, we identified morphology and characterization of PB-MSCs and EPCs. We also created a co-culture system of PB-MSCs and EPCs, and assessed the CD31 expression, gene expression of VEGF, PDGF and ALP, and tube formation ability of the co-culture system. Moreover, the biocompatibility of the BCPB was assessed and secretion levels of ALP, OC, PDGF and VEGF by co-cultured PB-MSC and EPCs in the 3D co-culture system were determined (ELISA). In vivo studies were performed to assess the ability of the cell-scaffold construct to repair a rabbit large bone defect model by X-ray examination, gross observation, and histological staining. With the extension of incubation time, both osteogenic- and vascular-related genes were up-regulated when EPCs co-cultured with PB-MSCs. In addition, BCPB is biocompatible and the expression levels of osteogenic- and vascular-related markers were also up-regulated in the 3D co-culture system. Seeding of PB-MSCs and EPCs within a modified BCPB and subsequently implanted gave rise to new bone and promoted vascularization in the rabbit model. These findings suggest that our vascularized tissue-engineered bone may be a potential alternative in the treatment of large bone defects.