Background: The regeneration of large, poorly vascularized bone defects remains a significant challenge. Although vascularized bone grafts promote osteogenesis, the required tissue harvesting causes problematic donor-site morbidity. Artificial bone substitutes are promising alternatives for regenerative medicine applications, but the incorporation of suitable cells and/or growth factors is necessary for their successful clinical application. The inclusion of vascular bundles can further enhance the bone-forming capability of bone substitutes by promoting tissue neovascularization. Little is known about how neovascularization occurs and how new bone extends within vascularized tissue-engineered bone, because no previous studies have used tissue-engineered bone to treat large, poorly vascularized defects. Methods: In this study, the authors developed a novel vascularized tissue-engineered bone scaffold composed of osteogenic matrix cell sheets wrapped around vascular bundles within β-tricalcium phosphate ceramics. Results: Four weeks after subcutaneous transplantation in rats, making use of the femoral vascular bundle, vascularized tissue-engineered bone demonstrated more angiogenesis and higher osteogenic potential than the controls. After vascularized tissue-engineered bone implantation, abundant vascularization and new bone formation were observed radially from the vascular bundle, with increased mRNA expression of alkaline phosphatase, bone morphogenetic protein-2, osteocalcin, and vascular endothelial growth factor-A. Conclusion: This novel method for preparing vascularized tissue-engineered bone scaffolds may promote the regeneration of large bone defects, particularly where vascularization has been compromised.