Sphingosine 1-phosphate (S1P) is a bioactive phospholipid that impacts migration, proliferation, and survival in diverse cells types, including endothelial cells, smooth muscle cells, and osteoblast-like cells. In this study, we investigated the effects of sustained release of S1P on microvascular remodeling and associated bone defect healing in vivo. The murine dorsal skinfold window chamber model was used to evaluate the structural remodeling response of the microvasculature. Our results demonstrated that 1:400 (w/w) loading and subsequent sustained release of S1P from poly(lactic-coglycolic acid) (PLAGA) significantly enhanced lumenal diameter expansion of arterioles and venules after 3 and 7 days. Incorporation of 5-bromo-2-deoxyuridine (BrdU) at day 7 revealed significant increases in mural cell proliferation in response to S1P delivery. Additionally, three-dimensional (3D) scaffolds loaded with S1P (1:400) were implanted into critical-size rat calvarial defects and healing of bony defects was assessed by radiograph x-ray, microcomputed tomography (μCT), and histology. Sustained release of S1P significantly increased the formation of new bone after 2 and 6 weeks of healing and histological results suggest increased numbers of blood vessels in the defect site. Taken together, these experiments support the use of S1P delivery for promoting microvessel diameter expansion and improving the healing outcomes of tissue-engineered therapies.