Reliable bone regeneration can be achieved with a pellet culture system using bovine periosteal cells. However, bone regeneration and neovascularization processes in this system have remained unclear. The present study aimed to clarify the extracellular environment and neovascularization process. To detect components of the extracellular matrix secreted by cells and to identify the conditions necessary for bone regeneration in the body, Western blotting and in vivo tests in nude mice were performed. Cells were cultured with or without ascorbic acid and culture supernatant was precipitated. Western blotting showed that culture supernatant contained collagen type I, procollagen type I, and procollagen type I C-terminus when cells were cultured with ascorbic acid. Cells cultured with ascorbic acid formed partial bony tissues at 2 weeks after grafting to nude mice, while bone formation was missing without ascorbic acid. Immunostaining was performed using species-specific vascular endothelial cell markers to ascertain whether vascular endothelial cells were bovine or murine (nude mouse). Immunohistological methods showed vascular endothelial cells in osseous tissue formed in the subcutaneous tissue of nude mice were murine. Extracellular matrix synthesis in vitro and host blood flow in vivo are essential for bone regeneration.