Chondrogenic priming (CP) of mesenchymal stem cells (MSCs) and coculture of MSCs with human umbilical vein endothelial stem cells (HUVECs) both have been shown to significantly increase the potential for MSCs to undergo osteogenic differentiation and mineralization in vitro and in vivo. Such strategies mimic cartilage template formation or vascularization that occur during endochondral ossification during early fetal development. However, although both chondrogenesis and vascularization are crucial precursors for bone formation by endochondral ossification, no in vitro bone tissue regeneration strategy has sought to incorporate both events simultaneously. The objective of this study is to develop an in vitro bone regeneration strategy that mimics critical aspects of the endochondral ossification process, specifically (1) the formation of a cartilage template and (2) subsequent vascularization of this template. We initially prime the MSCs with chondrogenic growth factors, to ensure the production of a cartilage template, and subsequently implement a coculture strategy involving MSC and HUVECs. Three experimental groups were compared; (1) CP for 21 days with no addition of cells; (2) CP for 21 days followed by coculture of HUVECs (250,000 cells); (3) CP for 21 days followed by coculture of HUVECs and MSCs (250,000 cells) at a ratio of 1:1. Each group was cultured for a further 21 days in osteogenic media after the initial CP period. Biochemical (DNA, Alkaline Phosphatase Activity, Calcium, and Vessel Endothelial Growth Factor) and histological analyses (Alcian blue, alizarin red, CD31(+), and collagen type X) were performed 1, 2, and 3 weeks after the media switch. The results of this study show that CP provides a cartilage-like template that provides a suitable platform for HUVEC and MSC cells to attach, proliferate, and infiltrate for up to 3 weeks. More importantly we show that the use of the coculture methodology, rudimentary vessels are formed within this cartilage template and enhanced the mineralization potential of MSCs. Taken together these results indicate for the first time that the application of both chondrogenic and vascular priming of MSCs enhances the mineralization potential of MSCs in vitro while also allowing the formation of immature vessels.