Angiogenesis and osteogenesis are tightly coupled during bone development and regeneration. Mesenchymal cells in the developing stroma elicit angiogenic signals to recruit new blood vessels into bone. Reciprocal signals, likely emanating from the incoming vascular endothelium, stimulate mesenchymal cell specification through additional interactions with cells within the vascular stem cell niche. The hypoxia-inducible factor-1 alpha (HIF-1) pathway has been identified as a key component in this process. We demonstrated that overexpression of HIF-1 in mature osteoblasts through disruption of the von Hippel-Lindau protein profoundly increases angiogenesis and osteogenesis; these processes appear to be coupled by cell nonautonomous mechanisms involving the action of vascular endothelial growth factor (VEGF) on the endothelial cells. The same occurred in the model of injury-mediated bone regeneration (distraction osteogenesis). Surprisingly, manipulation of HIF-1 does not influence angiogenesis of the skull bones, where earlier activation of HIF-1 in the condensing mesenchyme upregulates osterix during cranial bone formation. © 2010 New York Academy of Sciences.