A major limitation with current tissue-engineering approaches is creating functionally vascularized constructs that can successfully integrate with the host; this often leads to implant failure, due to avascular necrosis. In order to overcome this, the objective of the present work was to develop a method to incorporate growth factor-eluting alginate microparticles (MPs) into freeze-dried, collagen-based scaffolds. A collagen-hydroxyapatite (CHA) scaffold, previously optimized for bone regeneration, was functionalized for the sustained delivery of an angiogenic growth factor, vascular endothelial growth factor (VEGF), with the aim of facilitating angiogenesis and enhancing bone regeneration. VEGF was initially encapsulated in alginate MPs by spray-drying, producing particles of < 10 µm in diameter. This process was found to effectively encapsulate and control VEGF release while maintaining its stability and bioactivity post-processing. These VEGF-MPs were then incorporated into CHA scaffolds, leading to homogeneous distribution throughout the interconnected scaffold pore structure. The scaffolds were capable of sustained release of bioactive VEGF for up to 35 days, which was proficient at increasing tubule formation by endothelial cells in vitro. When implanted in vivo in a rat calvarial defect model, this scaffold enhanced vessel formation, resulting in increased bone regeneration compared to empty-defect and VEGF-free scaffolds. This biologically functionalized scaffold, composed entirely of natural-based materials, may offer an ideal platform to promote angiogenesis and tissue regeneration. Copyright © 2015 John Wiley & Sons, Ltd.