A common strategy for promoting bone allograft healing is the design of tissue-engineered periosteum (TEP) to orchestrate host-tissue infiltration. However, evaluating requires costly and time-consuming in vivo studies. Therefore, in vitro assays are necessary to expedite TEP designs. Since angiogenesis is a critical process orchestrated by the periosteum, this study investigates in vitro 3D cell spheroid vascularization as a predictive tool for TEP-mediated in vivo healing. Spheroids of human umbilical vein endothelial cells (HUVECs) and human mesenchymal stem cells (hMSCs) are encapsulated in enzymatically-degradable poly (ethylene glycol)-based hydrogels and sprout formation, network formation, and angiogenic growth factor secretion are quantified. Hydrogels are also evaluated as TEP-modified allografts for in vivo bone healing with graft vascularization, callus formation, and biomechanical strength quantified as healing metrics. Evaluation of hydrogels highlights the importance of degradation, with 24-fold greater day 1 sprouts observed in degradable hydrogels in vitro and 4-fold greater graft-localized vascular volume at 6-weeks in vivo compared to non-degradable hydrogels. Correlations between in vitro and in vivo studies elucidate linear relationships when comparing in vitro sprout formation and angiocrine production with 3- and 6-week in vivo graft vascularization, 3-week cartilage callus, and 6-week bone callus, with a Pearson's R