Bone marrow-derived cells (BMCs) have been implicated as a modifiers of vascular growth either directly by transdifferentiation into endothelial cells (ECs) or indirectly through growth factor release. To examine these possibilities under physiological conditions, we developed a model of hypoxia-mediated angiogenesis in the mouse spinotrapezius muscle. This allows whole-mount analysis; therefore, the morphology and location of BMCs within the vascular network may be observed along with differentiation markers. We exposed bone marrow transplant chimeric mice to hypoxia and treated a subset with granulocyte macrophage colony-stimulating factor. Exposure to hypoxia caused an 13% increase in capillary density relative to control. Hypoxia did not increase the overall number of muscle-resident BMCs, but did increase the number of rounded BMCs by 25%. There was no discernable BMC contribution to the endothelium, although some BMCs assumed a pericyte morphology around capillaries. Granulocyte macrophage colony-stimulating factor treatment further increased the number of round BMCs within the muscle and caused a 23% increase in angiogenesis. The results of this study suggest a potentially beneficial action of BMCs during hypoxia through paracrine release of growth factors but not transdifferentiation into ECs.