Vascularization of tissues is a major challenge of tissue engineering (TE). We hypothesize that blood-derived endothelial progenitor cells (EPCs) have the required proliferative and vasculogenic activity to create vascular networks in vivo. To test this, EPCs isolated from human umbilical cord blood or from adult peripheral blood, and human saphenous vein smooth muscle cells (HSVSMCs) as a source of perivascular cells, were combined in Matrigel and implanted subcutaneously into immunodeficient mice. Evaluation of implants at one week revealed an extensive network of human-specific lumenal structures containing erythrocytes, indicating formation of functional anastomoses with the host vasculature. Quantitative analyses showed the microvessel density was significantly superior to that generated by human dermal microvascular endothelial cells (HDMECs) but similar to that generated by human umbilical vein endothelial cells (HUVECs). We also found that as EPCs were expanded in culture, their morphology, growth kinetics, and proliferative responses toward angiogenic factors progressively resembled those of HDMECs, indicating a process of in vitro maturation. This maturation correlated with a decrease in the degree of vascularization in vivo, which could be compensated for by increasing the number of EPCs seeded into the implants. Our findings strongly support the use of human EPCs to form vascular networks in engineered organs and tissues.