Vascularization is a prerequisite for bone formation. Endothelial progenitor cells (EPCs) stimulate bone formation by creating a vascular network. Moreover, EPCs secrete various bioactive molecules that may regulate bone formation. The aim of this research was to shed light on the pathways of EPCs in bone formation. In a subcutaneous nude mouse ectopic bone model, the transplantation of human EPCs onto β-TCP scaffold increased angiogenesis (p < 0.001) and mineralization (p < 0.01), compared to human neonatal dermal fibroblasts (HNDF group) and a-cellular scaffold transplantation (β-TCP group). Human EPCs were lining blood vessels lumen; however, the majority of the vessels originated from endogenous mouse endothelial cells at a higher level in the EPC group (p < 01). Ectopic mineralization was mostly found in the EPCs group, and can be attributed to the recruitment of endogenous mesenchymal cells ten days after transplantation (p < 0.0001). Stromal derived factor-1 gene was expressed at high levels in EPCs and controlled the migration of mesenchymal and endothelial cells towards EPC conditioned medium in vitro. Blocking SDF-1 receptors on both cells abolished cell migration. In conclusion, EPCs contribute to osteogenesis mainly by the secretion of SDF-1, that stimulates homing of endothelial and mesenchymal cells. This data may be used to accelerate bone formation in the future.