Objective To study the vascularization of the compositeof bone morphogenetic protein 2 (BMP-2) gene transfected marrow mesenchymal stem cells (MSCs) and biodegradable scaffolds in repairing bone defect. Methods Adenovirus vector carrying BMP-2 (Ad-BMP-2) gene transfected MSCs and gene modified tissue engineered bone was constructed. The 1.5 cm radial defect models were made on 60 rabbits, which were evenly divided into 4 groups randomly(n=15, 30 sides). Different materials were used in 4 groups: Ad-BMP-2 transfected MSCs plus PLA/PCL (group A), AdLacz transfected MSCs plus PLA/PCL (group B), MSCs plus PLA/PCL (group C) and only PLA/PCL scaffolds (group D). The X-ray, capillary vessel ink infusion, histology, TEM, VEGF expression and microvacular density counting(MVD) were made 4, 8, and 12 weeks after operation. Results In group A after 4 weeks, foliated formed bones image was observed in the transplanted bones, new vessels grew into the bones, the pores of scaffolds were filled with cartilage callus, osteoblasts with active function grew around the microvessels, and VEGF expression and the number of microvessels were significantly superior to those of other groups, showing statistically significant difference (Plt;0.01); after 8 weeks, increasingly more new bones grew in the transplanted bones, microvessels distended and connected with each other, cartilage callus changed into trabecular bones; after 12 weeks, lamellar bone became successive, marrow cavity recanalized, microvessels showed orderly longitudinal arrangement. In groups B and C, the capability of bone formation was weak, the regeneration of blood vessels was slow, after 12 weeks, defects were mostly repaired, microvessels grew among the new trabecular bones. In group D, few new vessels were observed at each time, after 12 weeks, broken ends became hardened, the defectedarea was filled with fibrous tissue. Conclusion BMP-2 gene therapy, by -upregulating VEGF expression, indirectly induces vascularization ofgrafts,promotes the living of seed cells, and thus accelerates new bone formation.