Bone marrow stromal cells (BMSCs) or mesenchymal stem cells (MSCs) are a heterogeneous population of cells that are multipotent. When rat BMSCs were seeded onto a 3-dimensional (3-D) tubular scaffold engineered from aligned type I collagen strands and cultured in osteogenic medium, they simultaneously matured and differentiated into osteoblastic and vascular cell lineages. In addition, these osteoblasts produced mineralized matricellular deposits. BMSCs were seeded at a density of 2 x 10(6) cells/15 mm tube and cultured in basal or osteogenic medium for 3, 6, and 9 days. These cells were subsequently processed for real-time reverse-transcriptase polymerase chain reaction (RT-qPCR), immunohistochemical, cytochemical, and biochemical analyses. Immunolocalization of lineage-specific proteins was visualized using confocal microscopy. In the present study, the expression pattern of key osteogenic markers significantly differed in response to basal and osteogenic media. Alkaline phosphatase activity and calcium content increased significantly over the observed period of time in osteogenic medium. The observed up-regulation of transcripts coding for osteoblastic phenotypic markers is reminiscent of in vivo expression patterns. Abundant sheets of Pecam (CD31) -, Flk-1 (vascular endothelial growth factor receptor-2) -, CD34-, tomato lectin-, and alpha-smooth muscle actin-positive cells were observed in these tube cultures. Moreover, nascent capillary-like vessels were also seen amid the osteoblasts in osteogenic cultures. Our 3-D culture system augmented the maturation and differentiation of BMSCs into osteoblasts. Thus, our in vitro model provides an excellent opportunity to study the concurrent temporal and spatial regulation of osteogenesis and vasculogenesis during bone development.