We have isolated a population of muscle-derived stem cells (MDSCs) that, when compared with myoblasts, display an improved regeneration capacity, exhibit better cell survival, and improve myogenesis and angiogenesis. In addition, we and others have observed that the origin of the MDSCs may reside within the blood vessel walls (endothelial cells and pericytes). Here, we investigated the role of vascular endothelial growth factor (VEGF)-mediated angiogenesis in MDSC transplantation-based skeletal muscle regeneration in mdx mice (an animal model of muscular dystrophy). We studied MDSC and MDSC transduced to overexpress VEGF; no differences were observed in vitro in terms of phenotype or myogenic differentiation. However, after in vivo transplantation, we observe an increase in angiogenesis and endogenous muscle regeneration as well as a reduction in muscle fibrosis in muscles transplanted with VEGF-expressing cells when compared to control cells. In contrast, we observe a significant decrease in vascularization and an increase in fibrosis in the muscles transplanted with MDSCs expressing soluble forms-like tyrosine kinase 1 (sFlt1) (VEGF-specific antagonist) when compared to control MDSCs. Our results indicate that VEGF-expressing cells do not increase the number of dystrophin-positive fibers in the injected mdx muscle, when compared to the control MDSCs. Together the results suggest that the transplantation of VEGF-expressing MDSCs improved skeletal muscle repair through modulation of angiogenesis, regeneration and fibrosis in the injected mdx skeletal muscle.