Large segmental bone defect repair remains a challenge in orthopedic surgeries. The tissue engineered bone graft will be a promising approach if vascularization of the graft is realized. In this study, beta-tricalcium phosphate (-TCP) scaffold incorporated with bone forming peptide-1 (BFP-1) was fabricated. Endothelial progenitor cells (EPCs) were introduced as well. We investigated the effect of BFP-1 on the proliferation, differentiation, and angiogenic functions of EPCs. Additionally, segmental femur bone defect was created in rabbits. Prevascularized -TCP scaffold was constructed and implanted into the bone defect. The vascularization and bone formation were evaluated after 4 and 12 weeks. The results showed that BFP-1 promoted the angiogenesis of EPCs through activating the activin receptor-like kinase-1/Smad pathway. The prevascularized tissue engineered bone graft enhanced capillary vessel in-growth and new bone formation. Significantly higher values of vascularization and radiographic grading scores were observed in groups involving EPCs and BFP-1, compared to -TCP scaffold alone. In conclusion, the synergy between EPCs and BFP-1 improved the vascularization and new bone regeneration, which has great potentials in clinical applications. (c) 2017 Wiley Periodicals, Inc. J Biomed Mater Res Part A: 106A: 1008-1021, 2018.