Segmental bone defects are often performed with cryopreserved allografts. They provide immediate stability, but risk nonunion, infection and late stress fracture. Improving the rate and extent of bone revitalization may improve results. Angiogenesis from surgically placed arteriovenous (AV) bundles improves bone blood flow and vitality in cryopreserved rat femora, augmented by vasculogenic growth factors. This study tests the same principal in Yucatan mini-pigs with a tibial diaphyseal defect, combining surgical angiogenesis with angiogenic gene therapy within cryopreserved orthotopically-placed allografts. Tibial diaphyseal defects were reconstructed with cryopreserved allografts and rigid internal fixation in 16 mini pigs. Half of the cranial tibial AV bundles placed within the allograft medullary canal were transfected with an adeno-associated virus containing vascular endothelial growth factor (VEGF) and platelet-derived growth factor (PDGF) genes (AAV9.VEGF.PDGF). Bone remodeling, angiogenesis, and allograft healing were assessed. During the postoperative survival period 5 of 8 transfected animals developed cutaneous benign vascular lesions at sites remote from the operated hindlimb, causing excessive bleeding. Within the allograft, both medullary (p = 0.013) and cortical (p = 0.009) vascular volumes were higher and vessels more mature than nontransfected allografts. Bone turnover (p = 0.013), bone mineralization (p = 0.018), bone healing (p = 0.008) and graft incorporation (p = 0.006) were all significantly higher in the gene therapy group. In a large animal tibial defect model, gene therapy of implanted AV bundles improved revascularization, remodeling and healing of cryopreserved allografts used for limb reconstruction. However, benign vascular lesions causing excessive bleeding developed in 5 out of 8 pigs transfected with AAV containing genes for VEGF and PDGF. This unforeseen complication makes vasculogenic gene therapy unacceptable for clinical use.