We evaluated the efficacy of vascular endothelial growth factor 165 (VEGF165) transgenic bone marrow mesenchymal stem cells (BMSCs) for the repair of early-stage osteonecrosis of the femoral head (ONFH) in mature mongrel dogs. This animal model was surgically established by femoral neck osteotomy and subsequent repinning. Twenty-seven dogs (54 hips) were divided into 3 equal-sized groups: a pCI-neo-VEGF165 BMSC group, a pCI-neo BMSC group and a core decompression-alone group. The lipofectamine was used to introduce the VEGF165 gene into the BMSCs. After core decompression, transgenic and non-transgenic autologous BMSCs were implanted. Therapeutic efficacy, including new bone formation and neovascularization in the femoral head, was examined by computed radiography, single-photon emission computed tomography, histological and histomorphometric analysis and immunofluorescent staining for von Willebrand factor in pathological sections. The femoral osteotomy site healed completely by the 4th week after the osteotomy surgery and regions of histologically evident osteonecrosis were found 12 weeks later. A regular arrangement of trabeculae and obvious bone regeneration were observed in the animals receiving implanted VEGF-transgenic BMSCs. The quantity of newly generated capillaries was significantly increased in the pCI-neo-VEGF165 BMSC group, but there was no significant difference between the pCI-neo BMSC group and the core decompression-alone group. These results demonstrated that VEGF165 transgenic autologous BMSCs enhanced bone reconstruction and blood vessel regeneration in the ONFH model. Compared with non-transgenic BMSCs, this approach could provide advanced benefits in the treatment of ONFH.