In vitro bone regeneration strategies that prime mesenchymal stem cells (MSCs) with chondrogenic factors, to mimic aspects of the endochondral ossification process, have been shown to promote mineralization and vascularization by MSCs both in vitro and when implanted in vivo. However, these approaches required the use of osteogenic supplements, namely dexamethasone, ascorbic acid, and β-glycerophosphate, none of which are endogenous mediators of bone formation in vivo. Rather MSCs, endothelial progenitor cells, and chondrocytes all reside in proximity within the cartilage template and might paracrineally regulate osteogenic differentiation. Thus, this study tests the hypothesis that an in vitro bone regeneration approach that mimics the cellular niche existing during endochondral ossification, through coculture of MSCs, endothelial cells, and chondrocytes, will obviate the need for extraneous osteogenic supplements and provide an alternative strategy to elicit osteogenic differentiation of MSCs and mineral production. The specific objectives of this study were to (1) mimic the cellular niche existing during endochondral ossification and (2) investigate whether osteogenic differentiation could be induced without the use of any external growth factors. To test the hypothesis, we evaluated the mineralization and vessel formation potential of (a) a novel methodology involving both chondrogenic priming and the coculture of human umbilical vein endothelial cells (HUVECs) and MSCs compared with (b) chondrogenic priming of MSCs alone, (c) addition of HUVECs to chondrogenically primed MSC aggregates, (d-f) the same experimental groups cultured in the presence of osteogenic supplements and (g) a noncoculture group cultured in the presence of osteogenic growth factors alone. Biochemical (DNA, alkaline phosphatase [ALP], calcium, CD31, vascular endothelial growth factor [VEGF]), histological (alcian blue, alizarin red), and immunohistological (CD31) analyses were conducted to investigate osteogenic differentiation and vascularization at various time points (1, 2, and 3 weeks). The coculture methodology enhanced both osteogenesis and vasculogenesis compared with osteogenic differentiation alone, whereas osteogenic supplements inhibited the osteogenesis and vascularization (ALP, calcium, and VEGF) induced through coculture alone. Taken together, these results suggest that chondrogenic and vascular priming can obviate the need for osteogenic supplements to induce osteogenesis of human MSCs in vitro, while allowing for the formation of rudimentary vessels.