Vascularization is critical to the survival of engineered tissues. This study combined biophysical and bioactive approaches to induce neovascularization in vivo. Further, we tested the effects of engineered vascularization on adipose tissue grafts. Hydrogel cylinders were fabricated from poly(ethylene glycol) diacrylate (PEG) in four configurations: PEG alone, PEG with basic fibroblast growth factor (bFGF), microchanneled PEG, or both bFGF-adsorbed and microchanneled PEG. In vivo implantation revealed no neovascularization in PEG, but substantial angiogenesis in bFGF-adsorbed and/or microchanneled PEG. The infiltrating host tissue consisted of erythrocyte-filled blood vessels lined by endothelial cells, and immunolocalized to vascular endothelial growth factor (VEGF). Human mesenchymal stem cells were differentiated into adipogenic cells, and encapsulated in PEG with both microchanneled and adsorbed bFGF. Upon in vivo implantation subcutaneously in immunodeficient mice, oil red O positive adipose tissue was present and interspersed with interstitial fibrous (IF) capsules. VEGF was immunolocalized in the IF capsules surrounding the engineered adipose tissue. These findings suggest that bioactive cues and/or microchannels promote the genesis of vascularized tissue phenotypes such as the tested adipose tissue grafts. Especially, engineered microchannels may provide a generic approach for modifying existing biomaterials by providing conduits for vascularization and/or diffusion.