Limited autologous vascular graft availability and poor patency rates of synthetic grafts for bypass or replacement of small-diameter arteries remain a concern in the surgical community. These limitations could potentially be improved by a tissue engineering approach. We report here our progress in the development and in vivo testing of a stem-cell-based tissue-engineered vascular graft for arterial applications. Poly(ester urethane)urea scaffolds (length = 10 mm; inner diameter = 1.2 mm) were created by thermally induced phase separation (TIPS). Compound scaffolds were generated by reinforcing TIPS scaffolds with an outer electrospun layer of the same biomaterial (ES-TIPS). Both TIPS and ES-TIPS scaffolds were bulk-seeded with 10 x 10(6) allogeneic, LacZ-transfected, muscle-derived stem cells (MDSCs), and then placed in spinner flask culture for 48 h. Constructs were implanted as interposition grafts in the abdominal aorta of rats for 8 weeks. Angiograms and histological assessment were performed at the time of explant. Cell-seeded constructs showed a higher patency rate than the unseeded controls: 65% (ES-TIPS) and 53% (TIPS) versus 10% (acellular TIPS). TIPS scaffolds had a 50% mechanical failure rate with aneurysmal formation, whereas no dilation was observed in the hybrid scaffolds. A smooth-muscle-like layer of cells was observed near the luminal surface of the constructs that stained positive for smooth muscle alpha-actin and calponin. LacZ+ cells were shown to be engrafted in the remodeled construct. A confluent layer of von Willebrand Factor-positive cells was observed in the lumen of MDSC-seeded constructs, whereas acellular controls showed platelet and fibrin deposition. This is the first evidence that MDSCs improve patency and contribute to the remodeling of a tissue-engineered vascular graft for arterial applications.